Investment Property Spain -Spanish Property for sale- Investment Property - Furniture Packages - Costa del Sol - Costa Blanca- Costa Almeria - Businesses for Sale
Investment properties Spain

 

 

CU in Spain | Spanish Investment Property

Off Plan Property Spain

Resale property Spain

furniture packs Spain Spanish new Investment developments Investment new off-plan developments investment
Investment Property Spain - Spanish Property - Investments - Businesses - Furniture Packs
Investment Property in Spain

Property Investment

The choice of properties on sale can be overwhelming to many potential investors and bearing in mind that each investor has a different goal it can take weeks and weeks to locate the property that will meet an individual criteria.

Why invest in investment property? Because it is a tried and tested method of accumulating wealth over a period of time. Unlike many other investment opportunities, investment property utilises the leveraging of funds from financial institutions usually on an 8o% to 20% or a 70% to 30% ratio. This occurs as the majority of developers and promotors require either a 20 or 30% downpayment of the total sales price leaving the remainder to be paid at closing / completion usually in the form of a mortgage that could be offered by the developer or one that you have sourced yourself.

In simple terms you pay a deposit of 30% yet gain 100% of the capital appreciation based on the total sales price, not only after the mortgage has been issued but also in the interim term when the property is still in construction. This all sounds great in theory but as with any other market, due diligence is essential. You must ascertain as to whether now is the right time to enter a market or to get out of the market. Successful investors enter markets at the very beginning and set an exit strategy that will allow them to sensibly sell at a profit before moving on to the next investment opportunity. If for example you are invested in stocks and shares and the market drops you could end up with nothing, however real estate has increased in value every decade without fail.

For the longer term investor there is the added advantage that by renting out the investment property, a positive cash flow can be generated that can pay most if not all of your mortgage payments for you. Care and consideration is still required as not every investment property will suit the longer term investor.

Cu-inspain and our network of professionals search for viable investment properties in Spain and in various areas around the world. Once we have completed our due diligence we will then offer these properties to our investors.

Please take a look at some of the new construction/ off plan properties for sale

Due Diligence - The Property Investment

Always make sure that the property investment itself is in line with your expectations and that you can realistically achieve your goals.

The actual return of investment on the property depends often on the invest risk level. For instance, an early entry into an emerging market offers by far the highest return on a property investment. However, it is also exposes you to a higher risk than when you would invest in an established market place.

Location - Location - Location

Buying investment property near by popular 4 and 5* resorts and or golf courses will provide more often than not good rental returns Of course the proposed investment need to be close to an international airport and preferably one where low cost airlines fly to.

Cost / Value

A property investment will only give you a good return if it is acquired at the right price. Always allow for its value to appreciate and/or generate solid rental returns in proportion to its cost.

Infrastructure

From our experience we know that the best property hotspots are in areas where money is being invested by the local government in creating proper infrastructure. New airports or agreements with new carriers, especially low cost carriers is a huge plus when considering an area.

Tourism

Tourism is one of the major factors that enables most emerging property investment locations to create a lucrative property market and to provide buy to let property investment opportunities

Stability

The political, but also the economic stability of a country / region must be part of any due diligence research.

Due Diligence on the developer or constructor

Once you have decided on the location you wish to buy your investment property the developer / development due diligence process need to be considered.

Television documentaries have been dedicated to horror stories about property developments abroad where developers or promoters have taken deposits on projects for which they do not even own the land title, or where building permission has not been granted.

In situations like this, construction often come to an halt and the investor loses part and sometimes all their money

Unless we are totally satisfied that the developer is a bona fide become who has obtained all the necessary licenses and has access to sufficient funds to complete the project we simply do not recommend the development.

Our due diligence always includes the following checks:

Bank Guarantees stating that if the developer or constructor runs out of funds prior to the completion of the project, the bank or an insuring party will return funds to the investor.

Building Licenses. If a building license has not been granted and we believe that the proposed development as a pre-release is advantageous to property investors we will arrange that deposits are being held in an Escrow account or a client account of a reputable lawyer and only will be released to the developer when all relevant licenses are granted.

The Developer. Previous projects are a without any doubt the best point of reference to future projects. We only offer projects from experienced developers who have high standards, and equally important a reputation for completing on time and on budget.

Land Title Confirmation. We will make sure that the developer owns the land on which they intend to construct on.

Re-Assignable Contracts are important when operating a "buy to flip" strategy. In order to do this the contracts must be re-assignable. Without a re-assignable contract the investment strategy could be rendered useless.

Build Quality Guarantees. We always make sure that the builder offers a guarantee on construction and a detailed quality specification.

Although Cu-inSpain carefully selects investment property opportunities before offering to clients, we strongly recommend that all investors carry out their own due diligence procedures as wel,l prior to making any investment.

Please take a look at some of the new construction/ off plan properties for sale

Buy To Let Investment Property

Buy-To-Let means buying a property with the intent to rent it out rather than to live there. In the last few years this became an investment fad and has resulted in vast oversupply of properties for renting in some areas. Many observers believe more recent "buy to let" owners may suffer badly when house prices drop.

It is therefore of great importance to select property in a country and area that is popular with holiday makers and is situated close to 4 / 5 star resorts. We try to access buy-to-let investment opportunities that fit these criteria in areas where development is restricted and over-development is prohibited.

Leaseback Investment Property

The Leaseback concept has been in operation for over twenty years and more recently they have become an increasingly popular method of financing property ownership.

Leaseback is particularly popular in France and is now also available in Spain. The leaseback form of property ownership has caught on and is well known as a trouble-free and cost effective method of investing in overseas property.

The leaseback concept is simple: an investor buys the freehold of a property outright and then leases it back to a management company for renewable periods of up to 10 years. the property owner will receive a guaranteed rental return, irrespective of occupancy, at a fixed annual amount, which can offset the cost of their mortgage payments. Community fees, running and maintenance costs are normally paid by the management company.

At the end of the leaseback period, the owner of the property has the option either to live in the property, sell the property or simply sign a new leaseback contract with the management company for another fixed period of guaranteed income.

------------------

CU-INSPAIN offers assistance in helping investors in search of quality off-plan investment properties in Spain. With a strong, local market knowledge, and working relationships with a comprehensive network of agents, builders and developers, we help investors by selecting high quality investment properties in Spain that have an excellent future upside potential.

If you are investing to resell before completion - smaller off-plan developments will normally offer an easier turn around. Off-plan developments with only one or two phases will be in higher demand to your resale target audience as they will be ready to use, whether for personal use or for rental use, far earlier. Ask yourself this question -

 "Would you want to purchase, live in or rent a property that is in the middle of a building site?"

 Larger off-plan developments are great if you are in for the longer term equity growth but remember that you will be paying the mortgage repayments until the community is completed and all of the amenities and facilities are open. The likelihood of anyone paying full price to live on a building site is extremely remote. Either make allowances to pay the mortgage or be prepared to rent your property out at a discount rate until the project is completed

Our expertise enables you to rest assured, knowing that your assets have been professionally chosen to minimize costs and maximize the return on your investment.

Risk Factors Of Buy to Let Investment Properties

Market Cycles:

Investing in areas with good long-term growth potential can lower the risk and increase potential profitability. Lower risk investors should be financially and mentally prepared to hold their investment long-term and be prepared to wait out the cyclical changes of the real estate market. Investors should be aware that if they sell their properties in a bad market they could incur losses.

Cash Flow:

An Investor’s risk is increased when they invest beyond their means, more so when the market has reached its peak.

The cash flow of the property is an important determining factor of the suitability for the investor. When investing in buy to let properties, please take into consideration vacancy factors, fluctuations in rent, increased costs in operating and maintenance expenses, and interest rate movements.

It is wise to budget for higher than expected costs in a worse case scenario to determine the monthly ongoing investment that may be required. If this scenario is not manageable, then investors should seek other alternatives.

Vacancies:

Vacancies are an integral part of your cash flow. The affordability of the cash flow must be taken into account when it is vacant.

Investors should consider the affordability of holding the investment property in worse case scenarios of high vacancies over a period of time. Renting the properties on an annual basis can proportionately offset this, virtually guaranteeing full occupancy once a suitable tenat has been chosen. We estimate an annual rental income of between 4-7% of the value of the property if rented on a long term(11 month contract).

There are some strategies that are effective in reducing this risk such as:

  1. Utilizing Professional Property Management Companies
  2. Investing in desirable buildings in good locations
  3. Good quality, tenant selection

Property Management:

Management of your investment property can be very frustrating. Inexperience in this area can affect the return on your investment. To reduce this, use reputable property management companies. They will be responsible for all the details of managing your investment property in a professional and efficient manner and traditionally do a much better job than the individual investor.

Damages by Tenants:

To reduce this risk, property management companies should carefully screen applicants to ensure that only quality tenants occupy investment property. This is typically a one month rental charge for an unfurnished property and two months for a furnished property.

Extra fund allocation:

Investors should be financially prepared in the case of any major repair or maintenance costs that may be required to keep the property operating properly. Generally, a reserve fund is built up through the fees as a contingency for these situations. We however, recommend that a contingency fund is put into place immediately to allow for emergencies and to ensure that the property is always in a excellent condition. Investors should be financially prepared for this, if they are to invest in Revenue Properties.

We highly recommend that investors be able to comfortably pay for the investments in which they are interested.

The Spanish property market has gone from strength to strength in recent years and, with forecasts from several quarters of a further 1.5 million people purchasing property in southern Spain in the next decade, it does indeed look good. However, we live in uncertain times, as those already invested in the stock markets know, and market fluctuation is common. Those investors that are careful when investing will realise this and not over extend.

IF YOU CANNOT AFFORD TO BUY IT, DON‘T!!

There are many reasons why astute investors include REAL ESTATE in their investment portfolios

Cash flow, Diversification, Leverage and Hedging against Inflation and Wealth Creation to name but a few.

As with investments in stocks and shares, your investment property portfolio should be well diversified. Once you feel content with your initial investment properties you should investigate different types of property in various areas, spreading the risk as you would with your stocks.

Investing in revenue property for long term or speculative gain requires a, certain clarity of thought. You will not be living in this property yourself so do not allow personal preference or sentiment to enter the equation.

Business is business. If a stock offered value for money and the upside was positive, would you allow the fact that you dislike the Managing Director to stop you investing? Of course not, because you would appreciate the opportunity for what it is! There is NO place in an investment portfolio for emotion.

Each country has its own tax legislation and we recommend that you investigate your tax liabilities prior to investing.

Investor's checklist

 Arrange your finances, so that when you find the right investment property, you can act promptly;

Choose a reputable solicitor

Find a property management company

Look for a location that a meets your requirements, both in the immediate future and in the long term;

Find out the history/forecast of the area;

Confirm the current house values of the area and current rental prices.

NB/ It is also important to take into consideration the future furnishing of the property. By sourcing suitable furniture for your property BEFORE completion, you can in many cases, include this amount into your mortgage. Equally as importantly your furniture suppliers will already have your furnishings in stock and will be able to install the furniture as soon as the property is in your name and the utilities area connected. This can put you and your property into a very advantageous situation when it comes to finding a tenant. Typically furnishing companies will take 12-16 weeks to order and install the furniture, which means that you could end up paying 4 months of mortgage payments unnecessarily if you leave it until after signing.

Alhaurin de la Torre Property Alhaurin el Grande Property Alora Property Antequera Property Benalmadena Property Businesses Spain Cartama Property Coin Property Costa Almeria Property Costa Blanca Property Costa Calida Property Costa del Sol Property Elviria Property Estepona Property Fuengirola Property Furniture Packs Golf Property Spain Kitchens Costa del Sol Manilva Property Marbella Property Marbella Luxury Property Mijas Property Monda Property Nerja Property Nueva Andalucia Property Pizarra Property Polaris World Property Puerto Banus Property Puerto Duquesa Property Ronda Property San Pedro Property San Roque Property Sotogrande Property Spanish Holiday Homes

 

 

Property in Spain

Spanish Property

INVESTMENT PROPERTIES There are several types of investment property to consider dependant on the type of investor you are. Sign up for information on our latest investment opportunities...

 

  • Valid XHTML 1.0 Transitional
copyright © 2003-2008 Cu in Spain - Web Design & SEO by SEOGB
spanish property investment