Re: Re: 10 Reasons Not To Buy A Property In Spain

Fuengi (Andrew)

@logan wrote:

Yes been there, got the tee shirt and used to be an investor not far away. I said between 60-90 for a two bedroom flat.
From that investor perspective if a property struggles to achieve a long term rent of 550€ it’s not worth €145k. The owner pays the overheads and any professional investor will seek a minimum capital return of 5% net return annually.
It runs thus:-
Purchase price €145K + 12% taxes = €162,400
Annual overheads say €4-5k = €167.400.
Required minimum rental income – €8370 at 5%.

Holiday lets are just a hassle and increase your overheads.

To be honest most property investors these days would not get out of bed for a 5% return on capital. In the days of capital growth in property and before huge CGT it was different. The 5% just kept you ticking over. Now it’s impossible to achieve. So what’s the point.

If I wanted to invest in that apartment I would offer no more than €90k.

Not arguing with your reasoning, but the purchase tax on the property at 145.000€ would be approx. 13.050€ (9%).