Underestimated costs
 

We're having to rework our budget as we underestimated the cost of property. The initial plan was to just rent, but rentals are far more expensive than we first thought and also hard to come by (we're moving to the Javea area). We thought 700 - 800 euro per month, but it's more like 1200 +. We're now looking at buying as it makes more sense at these prices. However, this has changed our investment profile and we are having to review our budget.

We've also decided to put my son into the international school.

We're on a fixed income. Originally we had about 3,500 euro pcm to live on, inc rent. Which seemed fine. Our revised figure is now round the 2,200 pcm net after school fees (no rent). Assuming all things being average, is 2,200 pcm enough for a family of 3 to live comfortably on? On paper it looks fine, in fact we end up with about 1000 a month to spare, but that's the theory, reality might be completely different.

The alternative is to review where we live, go for somewhere we can get a decent villa for 800pcm and go back to plan A, but we do love Javea.

Any thoughts as to our situation would be very welcome.

Di.

Re: Underestimated costs
 

It's a very difficult Q to answer

If you want to live on the Coast then Javea and the Costa Blanca is pretty much the cheapest area

You will still be better off renting. Rent is usually just 2-3 per cent of the purchase price per year. So a property renting out for 1200 euros per month on a long term let will have a purchase price of around 400-600k euros

Each month, budget would be about the following in a smallish 3 bed villa

Rent EUR1,200
School EUR800
Petrol, car insurance and maintainance (per car) EUR200
Food EUR500
Electric. water, tel, internet, mobile phone etc EUR300
TOTAL EUR3,000

Which leaves 500 euros for clothes, going out, holidays, one-off gifts etc which is tight but not impossible

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The issue is there really is not much to rent. If there is it is usually winter lets, and the market is a bit on the volatile side here, so tenure is a bit unstable, and we don't want to be moving around every 6 months. The holiday rental market here is very strong, so people don't want to rent their property out long-term. The risk is, in a strong rental market, we might end up being priced out of the area.

Maybe we'll have to rethink Javea.

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It's been cheaper to buy, for a number of years now. Anyone still renting after the purchase opportunities of the last 10 years doesn't know much about finances!!

Unfortunately, you missed the bottom of the market but with a lot of hard work good deals are possible. You won't find a result by searching the internet. Pounding the pavement is the only way.

Also, as a non-resident you will pay about 30% more for a property (recently published government statisitic) than a resident, irrespective of nationality and including Spaniards.

Good Luck.

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What a load of nonsense

Until recently a paid 800 euros per month for a flat that was offered for sale at 800k. Just the sales tax would have cost me 80k euros which is roughly 8 years rent

There are a lack of good rental properties across the whole of Spain because the Spanish culture is to buy not rent, but if you find a good rental property then you cannot lose, and no stress around deposits, sales tax, mortgages etc. And if you want to leave, just 1 month notice and off you go!

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Absolutely untrue!

There are many reasons for wanting to rent - not just financial.

Also, in some areas, house prices are still falling so how can you say "you missed the bottom of the market"?

Please provide a link to this statistic as I would like to see how they get to this figure.

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And you don't have the worry of selling up.

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???

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This is not correct , Javea and some of the surrounding area's are the most expensive on the costa blanca and are somewhere near twice or more over the southern costa blanca and are also more expensive than a far few other area's round the Spanish coast.

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When you say international school do you mean the Lady Elizabeth school?

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As you can see, all posters have different views and expectations.
Cricketman found a rental that's obviously cheaper to rent than to buy, but there are millions of people who don't pay €800 a month for rental, just like there are millions of properties that don't cost 800K:rofl:.




Maybe you should rethink Javea. I don't live in Spain permanently and only have a holiday home, but in the area I bought it's certainly cheaper to buy than to rent, but every area will be different.




A 3 bed house with decent sized garden can be bought for 130K where we are, but most Brits want to be further South, so I suppose you pay a premium.

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I am much further North than you and a 3 bed with garden here will be 300k euros plus, unless it is located in the middle of nowhere

And yes snikpoh, the Spanish culture is to buy property not rent. They are the most house ownership obsessed nation in the world. 85 per cent of Spaniards own their own home, compared to about 75 per cent in the UK and only 50 per cent in Germany

Which means that there are not a lot of long term rental properties about, and those that are offered to rent are often in bad condition

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You are in an expensive part of Spain though and if you look all along the East Coast, there are plenty of cheaper areas.
I agree with the home ownership rate, however it went down but is going up again and around 80%. UK is even slightly lower at around 65%

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... after Romania, Lithuania, Slovakia, and Latvia. ;)

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Although in Romania you don't really own the house. You just take one of the empty ones and there are plenty of them:sarcasm:.

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They are ex communist countries where people were mainly given a house for free, so they are not obsessed with house buying at all ;)

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Xabia International College.

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For us the consideration is how to best use the cash - buy in Spain or use the money to buy a cash generating asset. We use BTL as it's what we know. With BTL I can get 8% yield, so £250k in UK property will gross about £20k and net about £14k less tax . The break even point is about €1400 a month. Although we might be able to rent a villa worth more than £250,000 for €1400 per month, but, as I said, there's not a lot about. And the other potential issue is rent might go up in Spain quicker than the UK, and exchange rate fluctuation.

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In general you would also expect appreciation of your asset to be far greater if invested in UK property, having said that if you can't find anywhere to rent and you really want to be in Xabia then maybe the decision is easier

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It is impossible to predict the future

You need to think whether you actually want to buy or want to rent in Spain, and base it on those grounds

A house in Spain is not a good investment unless you are going to live in it and enjoy it for the next 10-20 years or more. So it is incredibly important that you have the right area and you have a guaranteed income for that time

The 10% property sales tax every time you buy kills you

If you can't commit to that, then rent

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Question would be why are you so focused on Xabia and don't you think there would be other more affordable nice areas with international schools?

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I'm open to other prospects, but it's the mixture of beautiful mountainous area that, in contrast to some of the cheaper areas, is not too overbuilt and does not look like a wastelcnd, locals and expats and working town that is still busy in winter, plus a really good school. Also, my partner agreed to the move, but he does not want to live in a really dry zone and the Xabia region has a bit of greenery (nor does he want to live in the north)

We have plans to return in September and see if we can find somewhere else, but the only one I've come up with so far on paper is Nerja, but that looks even more costly. Any ideas would be welcome.

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Just asking as there seems to be plenty of other areas in Spain. When you say North, does he mean North of Spain, or further North along the med coast? I'm only really familiar with Costa Brava/Catalonia, but that would seem to tick all boxes when you say mixture of beautiful mountainous area that, in contrast to some of the cheaper areas, is not too overbuilt and does not look like a wasteland, locals and expats and working town that is still busy in winter, plus a really good school.




I can't comment on school, but I know that there is a St Georges School outside Girona and you have plenty of cheaper areas to live that wouldn't be too far from Girona and the coast.

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This would be an urbanisation you find all over the area and houses are still very affordable + only 15-20 mins drive to international school. Very green, still great weather and excellent coast + you aren't far from Barcelona or France

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Have you had a look around the Jalon valley area or if coast is a must Benissa costa, i think in one of your previous post you said you were looking at a few houses in Moraira but thought maybe its too quiet for you in winter.

This is of course a matter of opinion but i regard these areas as nicer than those around Javea and there is a very well regarded lnternational senior school in Lliber that is not far away, dont know costs of the one in Javea but the Lliber one is around €9500 a year, maybe worth a look if you haven't already

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Seems to be a great area too and is Moraira really that quiet?

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Agree totally, if you're especially if you are pensioners.

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Thanks for your ideas, so places I am not familiar with, so will do some research. We did look at Moraira, but it was a little out of the way for the school, but also not much sub-€300k which was not pokey and on a small plot.

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I would say no, there's no doubt it's a holiday area so is quieter in winter but as has been said they are all a bit like that, the market on Fridays always causes traffic hold ups no matter what time of year it is, having said that the one's in Benissa and Teulada are better according to my better half!

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Yes it's not cheaper, similar if not slightly higher prices than Javea, take a look around the area if you are still there, Lady Elizabeth school is from Moraira/Benissa Costa around 15mins so may be an alternative and will give you a wider area to look for rentals and will provide in abundance the green/mountain/coast area you are looking for

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Do you have an accountant in the UK? You should be netting more than £14k.

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I actually disagree with all those figures. You can't get 20k gross rent a year from a 250k property in the UK. You would be lucky to get 1k per month rent

So 12k gross

Minus 8% EA fees
Minus 8% management fees
Minus 10% insurance, repairs and maintanance
Minus 20% tax

Would be more like 7k net income per year i.e. around GBP600 per month. About half what the OP suggests

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Depends where you go and what you invest in. We have a few dotted around the south of the UK and i agree you'd be lucky to get 5%. For example, I have one in Exeter worth 250k and its only making 800pcm, but it's been very strong growth. There are many opportunities in places like Manchester where holding costs are much lower and yields are greater, for example I am looking at a block of three 2- bed apartmints in an ok area for 240k. Each flat is currently let for 550pcm. That's over 8%. Maintenance tends to be higher and management fees are about 10% Inc vat. Including voids and other expenses on average you can expect to net around 65 - 70% (in answer to a previous poster). This is conservative and anything else over this is a bonus. HMO rentals often yield 15%+, but that type of rental really needs the landlord to be local, although management companies do cater for HMOs.

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Management fees - 10% 2000
Boiler maintenance and gas certs - 200
Maintenance 1% of value - 2500
Void - typically about 5% - 1000

Total = 5,700
20k - circa 6k = 14k. And I'd get even less if used an accountant!

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Correct. CM hasn't a clue what he's talking about and will not be helping the Op by giving this baseless and inaccurate information. But he's got form.

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It's a lot cheaper than the Costa del sol, Costa brava and the North Atlantic Coast, which are the areas I know well

Sorry, I should have said that the Costa blanca was pretty much the cheapest area to buy property on the Med Coast.

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Op,

I know of somebody else who started looking around Javea and eventually settled in the area of Castellon de la Plana. All sorts of housing options and prices surrounding it, and now that the airport is open it's more accessible than before. You might want to take a look.

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Thanks for the tip, although we're now rethinking our whole strategy of moving to Spain. Our last recce raised some questions we need to work out.

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This is also not correct, the Costa Blanca is a long coast you will see prices in the Marina Alta(javea /moraira etc) are all but on a par with the Costa del sol and are much higher than southern costa blanca and Murcia etc.

https://data.kyero.com/en/data/spain

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This data is a bit misleading to be honest and you always need a lot more factors. Just because they show average prices for a whole province doesn't mean you can't find cheaper properties in the area. It just means that there are probably more exclusive properties that cost millions, the area is less built up, so fewer smaller apartments, or in the case of Barcelona a huge city where most jobs are. Girona shows 221K, but you can find plenty of detached houses for a lot less.