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Dear Expats,

Firstly thank you for such a great site and bless all you very helpful people! Hopefully I will be in the position to offer advice some day!
I'll get to it...... We just got back from a property show in Olympia London and got mixed reports about earning a 5% return from renting properties in the costa del sol/ blanc a area coastline?
Does anyone know if this a feasible idea as property seems to be such great value at the moment, many thank in advance, matthew
 

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Dear Expats,

Firstly thank you for such a great site and bless all you very helpful people! Hopefully I will be in the position to offer advice some day!
I'll get to it...... We just got back from a property show in Olympia London and got mixed reports about earning a 5% return from renting properties in the costa del sol/ blanc a area coastline?
Does anyone know if this a feasible idea as property seems to be such great value at the moment, many thank in advance, matthew
I guess it depends on your overheads (mortgage, insurance, taxes....) You then have to factor in that there are simply loads of properties up for rent, so you may not have tenants all the time....

Personally, I wouldnt think its a good investment, unless you are looking for something for yourselves in years to come and would take advantage of it as your holiday home.

It sounds to me like a sales pitch, that may be ok, but needs alot of investigation. You've come to the right place lol - I'm no expert, but there are folk on here who will know more



Jo xxx
 

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I was a landlord in the UK and Canada. I would never be a landlord in Spain.
It's too difficult to get rid of troublesome tenants and although there are bad landlords I've heard many many more stories about bad tenants. People move about a lot here and are often hard to trace.
And as Jo says there are so many properties for rent, especially two or three bed apartments on urbs.
 

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Dear Expats,

Firstly thank you for such a great site and bless all you very helpful people! Hopefully I will be in the position to offer advice some day!
I'll get to it...... We just got back from a property show in Olympia London and got mixed reports about earning a 5% return from renting properties in the costa del sol/ blanc a area coastline?
Does anyone know if this a feasible idea as property seems to be such great value at the moment, many thank in advance, matthew
IMHO - NO!

Do they say if that predicted 5% is gross or nett?

Personally, I can't see it happening.

Who would manage your holiday lets? At what cost?

If you're looking at long-term lets, what are your plans for when a tenant goes bad? Who will be there to file the notices with the judge, police etc. What will you do for the years that it could take to get them out?

... don't do it unless you have a very good (Spanish speaking) infrastructure in place.
 

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Who would manage your holiday lets? At what cost?
.
Apart from the various, many obscure, rules that one must comply with (varying I believe from Region to Region) I understand that if one employs an agent/person to manage lets then the lets are subject to IVA. I am not sure of the rate but maybe from 10% to 21% depending on who gives the advice ! I also believe that as an unregistered person for IVA, you must make the returns every time you recieve a payment, so maybe 12 or more times a year. For that you would probably need a gestor/accountant, and thus more cost. From what I know, and understand, most private lets are not 100% legal, albeit that many owners do not know that, and so probably make some income.

If you declare as legally required, and comply with all the rules (assuming you can discover what they are *) it is probably not a good business prospect to let, unless maybe it is on a ‘business scale’ i.e. not just one or two properties.


* Asking legal professionals will result in various answers, many, maybe all, of which are not 100% correct. "Ask 6 lawyers, get 7 different answers, all of which are wrong."
 

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I understand that if one employs an agent/person to manage lets then the lets are subject to IVA.
Please stop me when I go wrong;

Using an agent requires one to pay IVA
To pay IVA one must be either a registered business or autonomo
To be autonomo one must have a business or trade
To have a trade it must be on the approved 'list' from hacienda


My point to all this - I tried to declare myself autonomo based on the fact that I have holiday lets and long-term lets, and this was my income. Hacienda refused on the basis that this was not a 'trade' or a 'business'.

I now have to manage these lets without being autonomo - I declare all income to hacienda but don't pay IVA or SS.
 

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Please stop me when I go wrong;.
Hi, well as I said, Asking legal professionals will result in various answers, many, maybe all, of which are not 100% correct. "Ask 6 lawyers, get 7 different answers, all of which are wrong."

And if you cannot work it out Snikpoh, with your wide knowledge and experience, then who will be able to ?

God Bless 'our' Spain !
 

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I don't see the appeal of being a landlord in Spain unless the landlord lives very close to his/her properties, or really really trusts his/her property manager. There are plenty of places in the US where you can get 10% net. And problem tenants are a lot easier to remove there. I net 15%-18% on my US rentals.
 

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What you will 'net' from property rentals depends on so many variables.
Interest rates on other assets which may vary according to value and asset class, current state of the rental market, property values generally, operational costs including losses and damage caused by 'bad' tenants, of whom it seems there are many in Spain, maintenance costs, interest repaid on initial property purchase cost..

I came to the conclusion that 'real' money could be made only if you had a large portfolio of 'desirable' properties and could afford professional management fees.
So we sold.
 

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Discussion Starter · #10 ·
Wow thanks for all that information it's a lot to take in and now maybe it doesn't seem like a good idea, well do a little more research though.
To answer some of the questions firstly the 5% would ideally be net as we are buying the places outright, no mortgage. I would be managing them or very close by, and there would be three to four properties in the Costa del sol area and renting to holiday makers only hopefully who would pay up front.
Very interesting what you say about the hacienda, seems like they are trying to protect the Spanish businesses as much as possible.
Really greatful for all these answers thank you all loads :smile:
 

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You'd get a better return from wisely investing sums over 500k euros and with no hassle. Your 5% is very unlikely to be net after you've factored in taxes, management fees, repairs and maintenance and times when you have no occupants which could be for most of the year.
Holiday lets are two a penny on the CdS.
 

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Just for info, we're looking at renting for a holiday this summer - June/July ish in and around Nerja (just east of Malaga) and the choice is phenominal - it does seem to be as mrypg9 says "holiday lets are two a penny"

Jo xxx
 

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Discussion Starter · #14 ·
Well I'll take the positive out of it Jojo! Thanks again for your help and advice, hope you have a really great holiday and thanks for letting me know about that availability :smile:
 

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Matt,

I have a apartment in the UK which I rent out. It makes 6% net.

I have an apartment in Spain which I don't rent out, but my neighbour's place, which is exactly the same, rents very well at a good rate. I have no doubt at all that I could make 6% on my place if I wanted to rent it out.

I have a friend who has a place in the same town which she rents for between 30 and 35 weeks of the year. She makes a lot more than 6%.

If you buy the right property in the right place, it is possible to make a better return renting out a holiday home in Spain for a few months than you will for an all year rental in the UK. That is the case with my places.
 

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Hello Matt, Keep your money in your pocket. Don't even think of purchasing property in Spain as an investment. Your investment will fail.

Let's say you buy property on a good resort anywhere in southern Spain.I would guess you would have no difficulty in renting your property from mid June to mid August. You would pick up some rentals during May to mid June also along with some in September. But, it is the months October to April (7 months) you will encounter difficulty in even acquiring rentals @ €550.00 per month.

There are many costs that will drain any profit you hope to make. For a start there is the wear and tear of the accommodation. Things break down. Broken utility items must be replaced. The accommodation must be cleaned. You probably will have to pay for advertising. Add in refuse collection, local taxes, Spanish taxes, Community Fees, Public Lighting, etc. We haven't even scraped the surface of real estate agents fees yet.

Matt, you will probably encounter so much competition from others in the rental market that all you will increase is your stress levels.

If you want to dabble in the property market buy a place in Ireland as near to Dublin as you can. Rental prices are increasing @ 15% per annum. It is very difficult for the Irish to get mortgages after our banks broke the country up to eight years ago and the rental market is buoyant as a result.

Wait for the sun merchants to disagree with me. If you want a good return from your investment, buy in Ireland but don't come looking for sun.
 

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Many apartments were empty on the CDS even in August last year. There is so much over supply.
Apart from the in-demand places, where there is under supply. I would guess.

I have to guess because I don't know the CDS.

I do know Javea. I was asked last week by a friend whose apartment is fully booked through to the end of September if I was interested in taking a booking. The people booking can't find anything for their dates, there's under-supply.

They're ready to pay 1200 Euros a week for 2 weeks.

That said Op, I am not recommending Spain over anywhere else. I happen to agree with Leper that a purchase near Dublin right now would be a good bet, and I do think it would be a better long term bet than Spain in terms of total returns.

But the question was, could you make 5 ish % yield in Spain. And the answer is, YES, you can.
 

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No, Horlics, not 'yes YOU can'
Should read 'yes a lucky few can'.
Same with finding work. Some, a few, do. Most don't.
 
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