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Spanish Property in Spain
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Buying to Let or Rent

People who are looking to buy a property to then rent out obviously have different ideas and reasons for wanting to purchase the property. Some people will be looking to rent it out for a couple of years and then either sell it or use it themselves to settle down. Other people would like to use the property as a holiday home and just rent it out during the rest of the year to help pay the mortgage. Also there are professionals who are looking for properties which can be rented out as many weeks as possible with the highest return.

If you are looking to buy a property as a holiday home but also want to rent it out or if you later on want to settle down in the property or re-sale it we recommend you take a look at following sections as well:

Buying Property to settle down or retire in Spain

Buying Property in Spain to use as a holiday home

Buying Property in Spain as an investment

In this section we will focus on people who are looking to buy a property in Spain for the main purpose of renting and getting the highest annually return on the investment.
To secure the highest return on a rental property when buying in a new development there are four main variables to take into consideration including the price of the property, the qualities of the property, when to purchase, location, views and utilities nearby. Below you can find information and recommendations for each point.

Price

The annually return on the investment is the most important factor if you are looking to optimize your capital in a rental property. The price of the property should be as low as possible compared to the potential annually income of renting. Apart from the annual return on the investment, you will also have to take into consideration that the property will increase in value over the years and an average annual return on the investment will most likely be between 5-10%.

Example
If you looking to buy a 250,000Eur flat you can properly rent it out for about 25-40 weeks per year (depending on the property, location, rental promotion, etc) for an average of 600Eur per week which will leave an annual return on the investment of between 6% - 9.6%. From this amount you will have to deduct the annual property taxes, community fees and gas, water, electricity, etc.

Qualities

When buying to rent, the property will wear much faster and the furniture and installations will have to be changed or repaired frequently. As the qualities of the property and the price are normally related, the price is more important when you are looking for the highest return on your investment. The qualities, of course, have to be of a reasonable standard and include all the facilities which will attract holiday makers like a pool, garden, parking space, more than one bathroom, etc. The quality will also depend on the possible clientele and the area you purchase the property - i.e. a rental property in Marbella needs to have better qualities compared to a property in Torremolinos but the rent will of course also be higher.

When to purchase a new property

As explained in the section Off Plan Property in Spain the price of a property will increase during the time period of the construction. As the price is more important than being able to see the final results of the property, it can be recommended to buy as early as possible in a new development. It can also be recommended to take into consideration that the earlier you buy, the longer time it is going to take you before the property is finished and you can start to rent it.

Location, Views and Utilities nearby

The location of a rental property is very important. Most holiday renters are looking for beach and sun, nightlife and/or golf. It will of course be perfect to be able to offer all within walking distance but this is rarely possible (and when this is possible, it will normally be too expensive to give a high return on the investment) and we therefore recommend to focus on one or two areas. Although it is normally not possible to find a property on a golf course, next to the beach with good nightlife and many restaurants it is very important that there are at least the basic utilities like a supermarket, one or two restaurants and bar within few minutes distance. When choosing to buy a property in a new development you will have to take into consideration that many new areas where promotions are constructed will not be very attractive to tourist until they are fully finished and offers a good infrastructure. The views of the property do not have to be perfect but this does have an influence on the price, although a property without perfect views can normally be recommended. To secure a good annual income a golf course nearby, for example, is an insurance that the price will increase. Due to the perfect climate on the coasts of Spain it is possible to play golf nearly all year round and golfers normally prefer playing during spring and autumn as the summer gets too hot for playing in the day. If the property also has a pool and is within reasonable distance to the town it will be easier to rent out. A property focused more on being next to the beach and the nightlife will normally be rented out during the summer but during the rest of the year it could be more difficult. The rental price during the summer months will normally be higher than the average annual price.

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