If you're reading this, chances are that you have thought about investing in a property to rent it out, but you still have doubts.
With rental prices on the rise in Spain, it makes sense to consider buying a property with the purpose of renting it out and getting a good yield.
The decision to invest or not invest is very personal and depends largely on each person’s individual circumstances, but the truth is that buying to let is not as simple as it sounds… unless we have a solid knowledge base of the matter or can count on the help of a professional buyer’s agent who can assess and analyse the proposed investment.
For this reason, from Property Buyers by SOMRIE we would like to point out some key factors to keep in mind before investing in a rental property in Spain.
Why is it a good idea to buy-to-let?
- Most young people nowadays cannot afford to buy, but still want to be independent, thus their preferred option is to rent. This is especially true in big cities such as Madrid or Barcelona.
- It is a way to get an extra, steady source of monthly income.
- It is a good way to obtain long-term returns on your investment, through capital gains.
Which are the best Autonomous Communities to invest in rental properties?
Cataluña has the highest yield, followed closely by Madrid, Valencia and Murcia.
If none of these areas suit you, try to look for areas where demand is higher than supply.
Tips regarding rental investments
The monthly instalments should not exceed 30% of your income
If you take out a mortgage to pay for the property, the monthly instalments should not be a heavy burden. This way you will make sure you can affront any unforeseen expenses.
Size does matter
Generally speaking, smaller properties (for example 40m2 to 60m2) offer a higher yield than larger ones.
Choose location wisely
Properties in the heart of the city are generally a safer value and offer better prospects of return through capital gains. That does not, however, mean that they also offer a higher rental yield.
Renovate to ensure return
Bear in mind that if you buy a property that needs to be renovated, the purchase price should be low enough, and the cost of the renovations affordable enough, to still make it a profitable investment.
All in all, if you want to make an investment in a property with the idea of renting it out, it is best to count on the expertise of an investment specialist: a real estate buyer’s agent will always strive to help you make the most profitable purchase.