Real estate market in Spain has started to change in a way that buying properties in order to rent them out becomes a profitable investment way for a long term.
Rentals bring an average profitability of 5.5% to the owners and this underlines a very good investment. This can become a great nightmare for the tenants, too.
Many people think this is just a matter of buying a property for a good price, or finding tenants and starting to gain some money. This formula seems to be very simple, but there is no simplicity in it when we see it from the practical point of view.
Buying properties in Spain in order to rent them out.
The recovery signs of the real estate sector in Spain are very clear. Buying properties in order to rent them out can be a great investment, but there are other types of properties that can result as a great investment.
An example are the commercial units which offer an investment percentage on top of 7%, according to the survey made and published by idealista.com. Properties such as offices or garages can also become attractive investment offers although they are not really that popular investments in Orihuela Costa.
However, apartments, bungalows and villas are the types of properties with the highest demand in rentals in Orihuela Costa.
This type of properties has an extra advantage, as these properties can be rented out for short or long term (those annual rental contracts or for a longer period).
Orihuela Costa is a touristic area in Spain which counts with a constant flow of tourists of different countries in Europe, but also Spanish tenants.
Counted to the area´s characteristics, all these variables increase the demand on properties for rent during all year round. Rental demand increases considerably especially during July and August.
Sometimes, finding available properties for rent for short term during summer might result really difficult.
Rental management as an investment in Spain.
Normally, most of Costa Invest clients buy properties in order to rent them out. They buy properties as an investment in Orihuela Costa in order to get a punctual profitability during some months in summer or even for all year round.
There are two basic models of rental management in Spain and they are linked to the owners and their relation with the real estate. These are the two models:
1 – The real estate advertises the property for rent through different media such as website, real estate portals, directories, etc. The real estate finds the tenant, evaluates his solvency index and then it manages the legal aspects linked to the rental contract.
The real estate charges a commission (a month of rental) to the owner for the services and management offered.
After the management and the services offered by the real estate, the tenant must pay the rental price every month straight to the owner.
2 – The second way of managing rentals by a real estate in Spain is known as simple as “property management”.
This system is similar to the previous one. However, the real estate manages the monthly rental payments directly from the tenant.
In cases in which the tenants have problems with the property or they need anything related to the property, they will contact with the real estate which will deal with the problem as soon as possible.
Under these circumstances inside the real estate sector in Spain and taking into account that this real estate management is different than the previous model, the real estate normally charges a percentage of the rental income and the rest is sent to the owner.
Avoid errors when buying a property for renting it out.
Buying a property in Orihuela Costa in order to rent it out is a very good investment. However, you need to invest some money on the property in a smart way, counting with the professional advice inside the real estate sector.
The owner of a property for rent must take some factors into consideration, as some of them are directly related to the Spanish law based on rentals.
Rental contracts of properties.
They must be regulated according to the law. The conditions and the clauses that must be included in a rental contract in Spain are very clear.
In the particular case of Costa Invest Real Estate, both buyers who want to rent their properties and the tenants count with a personal advising coming from the company.
A solicitor of Costa Invest will edit the rental contract and analyze the clauses, so the contract will follow a valid law.
In the same time, Costa Invest counts with qualified professionals on speaking languages such as Polish, English, French, Russian, Norwegian, etc. in case a translation would also be needed.
Security deposit when renting a property.
Similar to any country in the European Union, a security deposit must be paid by the tenants when renting a property in Spain. That security deposit might vary from one to three months of rental.
This is a condition required to the tenants of long term rentals (rentals of a year or more). In the particular case of short term rentals, the entire sum of rental must be previously paid.
Once the contract has finished, the security deposit paid by the tenants will be refunded if and when the property is left in good conditions.
When a property is damaged and returned in bad condition, that security deposit will cover the damages. In this way, the owner of the property will not be affected.
Expanding the investment zone.
When an investor pretends to buy a property in Orihuela Costa, he must know that this area is really broad and diversified both in services and characteristics. One of the advantages of going to a professional real estate agent is that the latter counts with a precise knowledge of the area. The different types of properties offer different investment quotes for renting: by prices and market demand.
On the other hand, certain areas in Orihuela Costa have a higher enhancement. This is a very important factor when buying a property as an investment. Costa Invest Real Estate counts with a team made of highly qualified professionals with experience and a precise knowledge of the area.
Knowing the investment zone.
As we stated in the previous point, Orihuela Costa is an extended area. It is very important to know the different variables linked to the buying process of a property.
A usual error made by the investors is not knowing these variables are: the different types of properties, the selling prices and possible maintaining costs or the average price for renting it out and how to get tenants in the simplest and fastest way possible.
- What is the increasing percentage of Orihuela Costa?
- How many garages are in the building and neighborhood?
- What are the prices of the rentals in the area?
- What nationalities are the potential tenants?
- What are the maintaining costs and the taxes of the property?
- Does the property have an energetic certificate?
It is really important to find the answers of these questions, as we are here talking about buying a property in order to rent it out. Finding these answers related to the property shows us the property is actually a good investment.
Increasing the budget of buying a property.
One can believe by increasing the budget a little, the economic investment will be easily recovered afterwards. It might be like this, or not. Everything depends on the variables and they must be taken into consideration by the buyer-investor.
What is to be done if there are no tenants coming straight away? What might happen when the costs are higher than the expected ones? What if the rental price is not adjusted to the real investment made?
All these cases might result difficult to the new owner of the property.
That is why, Costa Invest Real Estate advises its clients during the entire process. All this in order to avoid problems when buying an investment property with the purpose of renting it out in Orihuela Costa (Spain).