eddieb

Hi,
we are thinking of buying in Spain, initially with a view of renting out for 10 years or so and then moving out ourselves, so the place we buy now may not be where we end up living.
Any suggestions about where/what to look for/avoid so we have decent renting potential? I've tried searching the web but all I seem to get is agents trying to sell property and I can't really put too much faith in what they say.
thanks

Leper

Hi Eddieb, The property market has collapsed in Spain. Properties are worth about half the value they were six years ago. Never mind what people tell you, I am telling the truth.

Prices may fall lower, but I feel they have bottomed out at the moment and will bob along up and down a little for years to come.

Bargains are everywhere for people intending to buy, but be warned the rental market has virtually collapsed also. You probably will have no difficulty renting out your purchase during June, July and August. But the rest of the year might be a problem.

kayley

I think it depends very much on the property. If it has something special such as fabulous views, it could attract very good rentals.

I generally get 60% occupancy in mine. I'm also getting a huge number of enquiries for next year, so it doesn't seem as if it is slowing down.

A property needs to be photogenic as it will be the photos that sell the property.

missile

I would not buy a property to rent in a foreign country. It will be a nightmare unless you employ a good agent and those are difficult to find. You are unlikely to cover your costs and the agent is the only one guaranteed to make money.

johnnyone

If you are not going to use or enjoy the property for 10 years I really cannot see the point of buying. You would be better off putting the money into a savings account. I cannot see prices moving much in the next few years but if the pound strengthens against the euro (or possibly the peseta) you could buy for less in the future.

angiescarr

I disagree. It's an excellent time to buy as long as you aren't looking to make a quick buck. You won't get anything for your savings and although rents are at an all time low they're still going to cover the cost of maintenance, property tax and a bit in your pocket. It rather depends how greedy you are. If you'll settle for a small return and are very careful about your tenants (i.e prepared to wait for the right ones and treat them well) you will have the pick of some very nice properties at much more reasonable prices. As others have said, they may well fall even lower. What you have to take into account is where an area is going. Is it going to dive into being a 'barrio' or when things return to something like normal which will prob take between 10 and 20 years will it be well situated well built and the sort of place you or a future buyer would like to live.
If I had money right now I'd spend it buying on the outskirts of a major city. In my case there's a lovely new build, quality 'suburb' which has halted temporarily but is of great quality properties just outside Seville. I'd buy there!
If you're wanting the coast there are loads of flats to choose from but you have to watch out for the ghettoisation of poor quality projects which no-one wants to buy. I'd spend some time here renting yourselves and visit several areas. Just because it's an investment in the future and a bit 'cheap' these days, no reason to buy carelessly.

agoreira

You're right, you won't get a lot for your savings, but it'll be safe, you won't lose anything. Plus a couple of percent is easy to get, whereas renting out a place is an unknown, nobody could tell you with any certainty where we'll be in a few years time. I think we can expect the banks to offload more properties at lower prices, I don't think property prices in general have stopped dropping yet. As someone says, as an absentee landlord you're relying on someone to look after your property and present it as you would, that all costs. Friend of ours has a property that a local Spanish woman looks after and both are delighted with the arrangement, but that's not always the case. I hear people say I can get £500, £1,000 a week rental, but most are empty through the winter months, your average weekly rental over the year might only work out £100-200 if you're lucky. If you've got money you are prepared to lose, prepared to take a gamble, go for it. I'm talking rental, mind, there are possible bargains if you want a property to live in, but that's completely different.

snikpoh

I guess we all have our own opinion - I would disagree and say it is NOT the time to buy unless you intend to use the property.

I have a friend who has a new-build villa on the Costa Blanca. It's in a great area, has good views has a pool etc. etc. The problem is that he simply can't rent it out.

With the cost of IBI, water, electric, maintenance and so on, he's loosing money every year. Last year they didn't use it at all - such a waste!

Invest the money elsewhere and only buy when you can use it as a holiday home or when you can use it full time would be my advice.

eddieb

Thanks everyone.
My idea/hope is to get something in a fairly popular area but not one of the new purpose built buy-to-rent complexes with 100's of identical properties that seem to be ghost towns most of the year.
I would like to break-even over the 10 years and would expect to lose a bit for the first 4 years, break even the next 3, and hopefully make up any loses over the last 3.
I plan to rent out over summer and use it myself in the quieter months. This way I can get used to the area and locals when the resort isn't jam packed with tourists.
At the end of the 10 years we intend moving permanently to Spain using the knowledge we have picked up to help us make the best choice for our permanent home.

missile

Makes more sense, if you can make use of it yourself. I hope you have factored the risks and cost of repairs, maintenance and taxes into your calculations.

Be careful, there are a lot of shaddy property management agents.

agoreira

I'm with you, we are renters when holidaying in Spain, and I often look at availability of properties online and many have just a few weeks a year booked. Spanish friends rent out their 5 properties successfully, and have never had problems, but most are looking pretty quiet this winter.

steviedeluxe

Worth reading (numbers of foreign buyers up; overall sales in Spain down)

http://elpais.com/elpais/2012/12/05/...73_951494.html

jackytoo

When my Daughter was pregnant she decided to take a few years out of work and they bought a villa close to us. About a year later she was bored and took a post in Paris. So they rented the villa. The agents made big promises whilst making small of all their charges! The cleaning, gardening, pool cleaning, repairs and replacement. The fact that nearly every renter buggered up the TV etc. The agent charged 5€ just to send her a fax. Despite being an agent with a high profile they only managed to let it July and August and this was in 2002. the boom years.

I know lots of people on the coast who are unable to rent their properties now, there are thousands empty. If I were planning to buy in Spain I would buy to let in the UK and review the situation in a few years. Whatever you buy now in Spain will be worth thousands less next year.

eddieb

Interesting article steviedeluxe. I've also read that the number of Brits & europeans investing generally is down. It seems to be mainly Chinese and Russians buying the higher priced properties, similar to what is happening in London.
Jackytoo, I thought about the UK but prices are way too expensive here unless you want to buy a slum and rent to students or benefit claimants, neither of whom have a great reputation for looking after places. The sort of places I would like to holiday in the UK myself are overpriced still.

agoreira

They might be out of your price range or more than you want to spend, but if they are still selling, they can't really be overpriced. No different in Spain, for good properties in a popular tourist area, you'll pay top dollar because they are likely to rent out. Buy a cheapo property in some remote spot and your chances of renting it out drop alarmingly. In UK plenty of people have got rich on the back of students, if you are near a university you are guaranteed tenants all year long.