Choosing a buy-to-let property is a popular way for Britons (and other overseas buyers) to get their foot on the property ladder in Spain without the full expense of owning an additional home. There are many different ways that these home owners make their properties work for them: visiting the property for their holidays and then letting it out when they’re not using it, letting out their property full time to maximise their profits, or simply letting out the property occasionally to friends and family.
Whichever route might be right for you, the fact is that owning buy-to-let property in Spain can be incredibly financially lucrative. With that in mind, here’s everything you need to know about the buy-to-let market in Spain, to help you make a more informed choice:
Understanding Your Potential Rental Income
The potential rental income that you could earn is one of the main benefits of choosing to purchase your own buy-to-let property in Spain. Spain remains one of the most popular holiday destinations for Britons, and more people than ever are opting for the home-from-home feel of a holiday let, rather than a hotel. This is likely to be especially true this year, where Covid-fear means many Britons are seeking the privacy of a holiday let, and platforms such as Air BnB make finding these lets easier than ever.
The main question everyone wants to ask when considering a buy-to-let is about money? What could your rental income be? Well, the latest figures suggest that buy to let investors in Spain are currently earning a 6 percent return on letting out their properties for short-term lets.
Your Buy-to-Let Property Checklist
If you think that investing in a buy-to-let property might be the right choice for you then you need to consider the following in order to ensure the property that you choose suits your needs, and that it is a wise investment:
- Plan Ahead
Before you take the plunge and make an offer on a buy-to-let property, you should have a financial plan for that property in place. What is its potential rental yield? How many short-term tenants would you need to hit that target? Is your target realistic? The more bedrooms, the more rental income you could make but, on the otherhand, these properties will also take more cleaning and maintenance. Have a plan in place, but one that you can be flexible with, before you invest in a buy-to-let property.
- How Much Work Are You Prepared to Do?
Do you have any building or DIY experience? Do you know anyone that does? Whilst the best value properties are those that need a little refurbishment, you need to consider how you will achieve this and how much it might cost. Properties in need of refurbishment tend to be more affordable, so it could be that the money you save on your purchase price can be used to update the property.
Don’t forget that a picture tells a thousand words: the way your property looks will have a huge impact not only on its rental yield, but also whether anyone rents it out at all. For that reason, even if you only want to do cosmetic work, you should be prepared to give the property a makeover. Neutral, easy to clean and maintain interiors are often best for rentals, but add some high-class touches such as art work or soft furnishings that will make your property stand out from the crowd on a property search website. You need to make your property look like an inviting and appealing place to stay.
- Have Your Paperwork Ready
The whole process of investing in a buy-to-let property will go much more smoothly if you have the correct paperwork ready and prepared. The paperwork you will need to register your property as a holiday let will depend on where you live and the rental laws in that region. Your local town hall will be able to inform you of the paperwork you will need, and you should research this before you invest in a buy-to-let property. This is vitally important to ensure that your rental is registered as legal and above board: if you’re not completely sure of the process, it might well be worth seeking professional advice for your convenience and peace of mind.
- Consider Using a Property Manager
Do you live in Spain already? Are you prepared to clean your property after each guest, as well as list it online and deal with any emails, problems, and paperwork? If not then it is highly likely that you will need to secure the services of a professional property manager. These can cost between 10 and 20 percent of your potential rental income to hire, but a good property manager can also make you money by helping you to secure new guests. They generally live locally, meaning that they can be on-hand to help with any issues that arise, and will also be able to keep an eye on your property for you whilst you’re in a different country.
- Short Term or Long Term Let?
Finally, you need to be clear about what type of buy-to-let property you’re looking for, as the needs for each will be slightly different. Short term or long term let? Whilst short terms lets tend to lead to higher yields, on a per night basis, they are also more intensive to manage, and turn over has to be high to be successful. Long term lets are less labour-intensive, but can also be less financially lucrative: there are pros and cons of both options, and only you can decide which is right for you.
Are you thinking of investing in a buy-to-let property in Spain? Looking to escape the cold and rainy weather in the UK and have your own holiday home that can make you money too? Then why not get in touch with Right Casa Estates, who are perfectly placed to help you find the Spanish home of your dreams. We’re excited to help you make your next move your best move!