Everything you need to know before buying investment property in Spain

There are usually two perspectives to look from when it comes to investing in real estate and acquiring properties. First, there are the people interested on buying a home to stablish, usually along with family, in a place they like; or to have as a vacation house.

While there’s the other perspective, and that is that of buying investment property; a favorite of many people looking to grow their assets, generate passive income, or buy and hold for a better ROI within the following years.

And for those considering investing in property, investors might consider acquiring the property in their country, since they may have greater control over the market. But acquiring real estate in the European Union, is also an important market, and Spanish real estate seems to be getting back to the good old times. Increasing demand for property in Spain is driving price increases. In fact, 25% of Britons intend to retire abroad and Spain is the most popular destination due to the country’s fantastic weather, the relatively cheap cost of living and close proximity to the UK, coupled with low cost airlines offering cheap flights and the ability to travel from one point to another in just over two hours.

Why to investment property in Spain?

Investment property is usually an excellent way to create passive income and is also seen as a solid low risk asset to acquire, especially if the property is bought in an economically active region, and the property can satisfy the need of several people looking for housing.

And when it comes to buying investment property in Spain, the reasons may be greater, or smaller. To begin with, Spanish economy seems to have finally recovered from the tough crisis that attacked it since 2008, jobs are emerging (though there’s unemployment), and the price of real estate has increased.

Spain has value for the rest of the world:

  • Climate and quality of life: Spain is the first country in Europe in terms of quality of life for foreigners living in our country and the third worldwide.
  • Privileged position on the map: Spain, at this level is one of the best destinations due to its privileged geographical location for international business, not only because it belongs to the EU, but also because it represents a fundamental point of contact with South America and at the same time a gateway to the African continent, in addition to direct connections with Europe.
  • Excellent infrastructure and communications network: The extensive road and rail network, as well as, the number and location of ports and airports, provide Spain with an exceptional communication network that favors both trade and tourism.

Also, their Golden Visa opportunity for investors has also attracted many international investors.

Are there risks with investment property in Spain?

One fear that usually strikes most investors when considering investing in real estate in Spain, especially when the goal is to generate a good return of the investment, is the economic crisis that Spain suffered and is just recovering from.

Of course, it’s important to consider that the outlook is good and there don’t seem to be signs of a sudden setback, as the Eurozone has recovered, and it seems that Spanish economy is now in the right direction.

The price of real estate has also recovered considerably, which along with the Golden Visa program, has attracted many international investors, but the fear for another bubble burst.

In this sense, if you are still considering investment property in Spain, even though right now the situation seems to be ideal, you might as well wait one more year, which should be a good indicator of how positive the future of Spanish real estate will be.

Tips for investing in real estate in Europe and Spain

Spain has many important national economic centers, and even though its capital, Madrid, is the most important one, the economy, as well as the population, are well distributed along the communities, which makes it good for investors, as they can make smarter moves such as buying on an emerging place.

If buying investment property in Spain, take the following tips into account:

  • Have a clear goal for your purchase: Are you interested on renting for small families in an important city? Do you want to rent full-featured luxurious summer houses in a Spanish beach? This can make the difference on what to look for.
  • Study the operation thoroughly from a financial, legal and fiscal point of view. It is necessary as far as possible to mitigate the risks that may threaten the investment.
  • Know the real estate market and its evolution. There are many reports published by official organizations and prestigious consultants about the real estate market. With these data you will know how the sector behaves, what types of properties are more profitable, where it is better to buy, how prices are evolving, etc.
  • Get advice from a specialized agency: There are professional agencies that offer financial advice and consultancy for international investors interested in buying real estate in Spain. Find one which values matches yours, and receive further advice to make the best investment decision.