When purchasing a property for rental purposes, buyers must take many things into account: location, the rental market, the red tape imposed by local governments, and the property’s ability to bring in steady (year-round) income. Are you thinking of purchasing a rental property in Spain? Read on . . .
Tips for buying an investment property in Spain
Investment property in Spain tip #1: Easy access/proximity to airports
“Location, location, location”: be sure that your tourists have easy access! Consider cities close to international airports; tourism soars when flights are affordable. When searching for a rental property location, also consider highly trafficked areas close to (but not in) major cities, as the city itself may already have a saturated tourist rental market (see tips #4 and #5).
Tip #2: Tourist appeal
To successfully rent your investment property in Spain, it should be located in an area with tourist appeal on several levels. Cities like Barcelona, Madrid, and San Sebastian enjoy fairly stable year-round tourism with huge spikes in the summer months. But other lesser-known cities can bring in the same rental income . . . in less saturated markets.
Girona, for example, is an attraction for food lovers (the city is home to Cellar Can Roca, voted the world’s best restaurant two years in a row) and is a haven for cyclists (professionals know the city for this reason!). Of course, the city is beloved by architecture fans for its gorgeous and historical city center and its beautiful bridges (one designed by Gustave Eiffel!) Since its appearance in Season 6 of Game of Thrones, it has additionally become an attraction for GoT lovers. The numerous appeals draw various tourist markets and ensures your property will stay rented throughout the year.
Tip #3: Potential for year-round tourism
European beach cities are a dream for many, but are not stable year-round income. For the perfect investment property in Spain, consider a location that has appeal year-round: perhaps warmer weather during the colder months (such a Southern Spain) or winter attractions (such as the Pyrenees).
When considering year-round tourism, keep in mind that your ideal property should have the amenities needed for the extreme weather: air conditioning in the summer, and heating in the winter. Be sure to factor in these costs when considering your rental prices, as gas and electricity prices will be much higher for properties with these amenities.
Tip #4: Ability to obtain renter’s licenses
Cities such as Barcelona have restrictions on rentals that are less than 30 days, and are enforcing them with vigor (just ask Air BnB, which was hit with a 60,000 fine for renting properties without the proper licensing). But getting a license (called a Habitatge d’ús turistic or “Licence for Touristic Use”) and an RTC number (from the Catalan Tourism Register) isn’t easy in all areas. In Barcelona, for example, the city council has refused to grant any licences within the Gothic Quarter and Cuitat Vella districts, and is asking residents in areas such as Eixample, Gracia, and Sants-Montjuic to report illegal apartment rentals.
The only option? Buying a property which has already received a license or purchasing a license from someone who has one. The rules vary from district to district, so check with the local city council (ajuntament) as to the process. A license in Girona, for example, costs roughly 140 euros and easy to obtain . . . although rumor has it that this is set to increase drastically, and that eventually a cap will be placed on this city’s H.U.T.’s soon.
Lessons learned? Stay ahead of the market and purchase an investment property in Spain in a place where tourism is set to skyrocket, or be sure that you’re purchasing in an area where renter’s licenses are easy to obtain (or already in the current owner’s possession).
Tip #5: Research the rental market
Check out the availability calendars on AirBnB for similar properties in the area where you are planning to purchase to get an idea for the rental market. Are the properties being rented regularly? Next, meet with some property managers to get an idea for the rental market. Ask for specific examples of rental reports to get an idea of the market and its fluctuations throughout the year.
Buying an investment property in Spain: further reading
If you need some more information about purchasing a rental property, read some of our helpful articles:
- The costs of buying property in Spain
- A breakdown of property taxes in Spain
- Are there dangers in buying a house in Spain?
- Obtaining a Spanish mortgage as a foreign investor: tips and tricks