What do you do if you have some money to spare and you want a safe return on it?
Real estate investment in Spain is a good option if you want to see your money work for you and not sit around in a bank account. But where do you begin and what are the pitfalls to watch out for?
Whatever your intentions – whether to live, holiday or simply rent out, real estate investment in Spain can be the perfect choice if you have some money to spare.
Real estate investment in Spain: different options
For many people it’s the lure of a holiday home – perhaps one day to be their retirement option – that brings them searching for properties along the Spanish coastline or inland.
However, there are also many for whom this is not a possibility at this stage in their life and prefer the idea of securing a property, renting it out and keeping their options open for later.
Alternatively, you might be considering ‘house flipping’. This is when you buy a property to renovate, carry out the work yourself or commission someone to do this and then sell it on at a higher price.
Whichever brief you fit, investing in bricks and mortar remains an excellent choice but there are some basic guidelines we’d like to share with you.
Guideline 1- do your research
It’s so easy to make a quick trip abroad, fall in love with a property and make the decision then and there. But real estate investment in Spain should be a calculated move and not a spur of the moment reaction.
You need to be sure about:
- Which area suits you best – inland, coastline, tourist, residential, rural, urban, Spanish community or international?
- The type of property you are interested in – apartment, house, with or without some land. What are the basic requirements that must be met?
- Your budget – what can you comfortably afford when all the taxes and oncosts have been taken into account?
Much of this kind of research can be done from your own country. There are plenty of books, magazines and online articles that can help you decide where to begin your search for your real estate investment in Spain.
When making these decisions don’t only think of what suits your needs now. It might be that your plan will be to sell the property in a few years and purchase something different.
But if you are looking for a place in which to settle then you should also consider whether this idyllic rural setting will be able to accommodate your needs in years to come.
Guideline 2- seek out the best advice
It can be so tempting to take short cuts and find the cheapest option when it comes to who will help you purchase your property. There are plenty of online experts who have no official legal training and perhaps even only a small command of the Spanish language.
Remember – it’s a different language and different culture with different rules and regulations – some of which might take you by surprise.
For example, did you know that it is customary in Spain to sign a preliminary contract and pay a deposit? We advise that before you do so, you should have a basic search done on the property – which leads to our next guideline.
Guideline 3 – don’t be rushed
Of course, if you are able, you will want to see a range of properties first. For many people this part of the real estate investment trail is the most exciting.
You can combine it with a holiday and imagine that you are the latest speculators in a Place in the Sun.
However, estate agents are, understandably, keen to secure your sale. We strongly advise you not to sign anything until you have commissioned a reputable company to help ensure:
- The legal status of the property, including home improvements
- Utilities and taxes check
You can be bamboozled with imaginary investors like yourselves waiting in the wings if you don’t sign on the dotted line over the next couple of days. It might not seem the case at the time but even if this is true, there are other properties on the market and it really isn’t worth the risk.
Guideline 4 – consider power of attorney
It may be that you have plenty of time to spare and enjoy the opportunity of coming over to Spain and overseeing the process yourself.
However, if you are not always in a position to come over you might want to arrange for a trusted representative to take out a limited power of attorney that enables documents to be signed in your absence.
Guideline 5 – don’t expect something for nothing
Although we did see a drop in house prices here, there has been a recovery and although property is still cheap in comparison to many other countries don’t expect to be able to negotiate too low for the property that has caught your eye.
If a property seems to be significantly cheaper than other similar properties, be a little cynical and check out why.
Guideline 6 – it really is worth the effort
Real estate investment in Spain can be a significant commitment of our finances for the majority of us. Any decision such as this comes with its moments of uncertainty.
Are there easier investment options? What if…? The past years have perhaps more than anything provided a warning that we can’t be sure about what is to come.
However, money sitting in the bank will not grow or provide the enjoyment that you can expect from your real estate investment in Spain.