But I have enough spare money to invest in a small property but actually would prefer a larger one so that my family and friends can stay without feeling cramped. And I read that this is the time to find a BARGAIN. In my eyes this is the time to INVEST.
So how about sharing the property with A.N.Other ?
What are the possible pitfalls ?
Well, what makes you feel that now is a time to invest? Do you think prices will be higher come next spring, for example? I think there will be far more distressed sellers in the future and some real bargains.
I rented a 2 bedroom apartment in a town inland from the costa de la luz at €240 a month, a few years ago so let’s be generous and say that the rent had increased to €260 a month. For that apartment to make sense for an investor the house would have to give a return of 10% given that I can get 6% in a bank, I should expect some voids, and a little bit for the additional risk that I am taking.
To get a 10% return, that apartment should generate 260*12 = €3,120 income per annum making that apartment worth €31,120 to me as an investor. That’s not a bargain, that’s a reasonable price for a 10% return. To me it would be a bargain if it went down in price to €25,000.
I know that you are after a bigger, more luxurious property but while apartments like I describe are so expensive I believe that the more expensive properties will be equally over-priced.