Spain - best rental locations / distressed sales

O

Oso

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You may have read my previous post "suggestions for holiday home in Spain" I am now trying to get a view on:-

i) What is the best coastal location for rental demand. I want my property to be in high demand and rented most of the year. Does such a place exist in the Costa del sol. Or is there just too much competition and long voids should be expected?

ii) How do I get a bargain? It is a buyers market at the moment. It may sound terrible but I want to find a seller who is utterly desperate to sell and will accept a silly offer. Any advice on how I can find distresed sellers?

Any tips appreciated
 
"It may sound terrible but I want to find a seller who is utterly desperate to sell and will accept a silly offer. "

You're right. It sounds terrible.

Find the area you want, the place you want and offer the price you want. Someone may or may not accept it.

mf
 
To give an example, the Marbella area is full of distressed sales right now. I know of somebody who bought a 3-bed 3-bath apartment in that area a few weeks ago for 180k, it had been sold for around 400k just two years ago. It included all furnishing and was ready to let, and the owner has a long term tenant lined up paying 1.3k per month.
There are lots of such places; the trick is to offer low on several and put a time limit on your offer. Be ruthless, and retract your offer after the elapsed time -- that will show the agency you are dealing with that you are serious.
The other trick is to secure your rents, to make sure that you get paid. I have heard of people who rented to expats who worked in shrinking sectors like real estate, and who were unable to pay their rent when it was due. Chose tenants carefully.
There's no doubt though that the market in popular areas will come back at some stage, and anyone like the exampe above will do very well when it turns. The big question is, how long will he have to wait? If someone wants a home in Spain though, now really is the best time to buy it. Avoid new developments however, they will be too expensive and may not sell out fully, leaving problems with developer control over common costs and/or problems with payment of common costs.
 
Hi Oso,

Before you jump in to the rental market in spain - do your research, if it is short term lets are straight forward - but there are thousands of people doing that also - long term lets can be tricky as the Law in spain favours the tenant over the landlord regard to rent - must longterm lets are for 11 months only any more than this the tenant has more rights. Research before you jump in! [broken link removed] is a good website.

Angela59
 
I normally invest in Spain, and my advice would be to consider how long you want to hold the property for. If youre planning on using the property for personal use or vacation; or you just want rental returns and/or appreciation (if possible). The market right now in Spain indicates that prices will not rise for a long time. So consider it a long-term commitment.

Sure you can find bargains in coastal areas, but selling the property in the future for liquidity might be a problem. I have properties in Madrid and in the Costa Blanca, and the beach ones are taking way too much time to sell. On the other hand, my investments in Madrid, move rather quick--between 3 and 6 months. My decision now, is to get rid of the coastal properties and focus on metropolitan areas, where you can also find bargains and can cash-in on the real estate, if needed...

Madrid and Barcelona would definitely be my main choices when investing in Spainish real estate.

As far as the Costa del Sol (Marbella, etc..), I also thought about investing there, but after a visit, seeing how overdeveloped it is; and the situation of that market--a sale of a 400k apt. for 180k should give you a clue. I decided to focus on Madrid instead. So far, no regrets...
 
In a recession, it can be hard to picture a situation when markets return to some kind of normality. That is the essence of a property slump; it becomes a downward spiral that can only be broken when confidence returns.
As sure as the sun rises though, at some time in the future the markets will revive. People have short memories in many ways, and when Europe gets back on its feet a whole new batch of people will aspire to a home in the sun. Spain slumped badly in the past, leaving a rash of unfinished developments and empty villas, but it turned around and it will turn around again. The difficult thing to predict is when that will happen, but it will happen.
If someone has the money and wants a holiday home in the sun, Spain is a good bet right now as long as buyers get the benefit of serious discounts. If you can buy an apartment or a villa at or below the cost of the land and the construction, then in any upturn you are sitting on a big gain. The key is to buy in the best possible areas in terms of what will be the most popular with buyers in the beginnings of an upturn, and that probably means the Marbella area in the Costa del Sol.
Only buy with a long term view however, and if you are confident that you will get the use out of a place yourself while you are waiting for things to improve.
 
you could do worse than have a look at the puerto pollensa area of mallorca, rental values seem to hold up very well, especially the pinewalk area. as an aside, have booked ryanair flights to mallorca 22 july- 3 aug. and am looking for 3 bed apt. with pool in puerto pollensa, anyone on here have one or know of anyone with one?
 
You could wait outside Doctors surgeries or even funeral homes there must be
people in real trouble and desperate to sell.
best of luck
 
Lollix said:
As sure as the sun rises though, at some time in the future the markets will revive.
Click to expand...

Probably not as sure as the sun rising. History in economics doesn't aways repeat itself.
On the other hand, the sun has risen every day for the past 12 billion years (I think).

Historically fallen markets do usually revive.
But it can take a while.
Property in Japan started falling in 1992. There has been a fall in property prices every year since 1992 in Japan
[broken link removed]

Property prices in the UK crashed in 1988, and it took about 10 years to return to 1988 levels (of course they exploded after that)

Agricultural Land prices in Ireland fell after 1979, and it took until about 1998 before they were at 1979 levels again...(of course they exploded again after 1998)

It's true that they usually revive, but it can take time.
Property prices in Spain could find a level, then plateau at that level for decades to come.
 
Lollix said:
In a recession, it can be hard to picture a situation when markets return to some kind of normality.
Click to expand...

Except the property market was not normal in the last decade, it was a bubble - which has now burst.

As sure as the sun rises though, at some time in the future the markets will revive.
Click to expand...

Dow Jones took until 1954 to regain it's 1929 bubble value (25 years).
Nikkei was 40,000 in 1989, it's below 10,000 today 20 years later.
NASDAQ was over 5,000 in 2000, it's below 1,900 today nearly 10 years later.

If you buy an asset in a bubble market and are waiting for "normality" to return - settle yourself in for a _long_ wait.
 
Agree with previous poster re bubble markets and stock indices etc.
However there is an additional factor that applies in the case of residential property. When the price of property drops below the cost of site acquisition plus construction costs, then buying property becomes attractive because new builds can never be offered at this level.
Right now, in many good quality locations in Spain, properties can be bought at below the cost of construction, making them an attractive option in my opinion for anyone taking a long term view.
 
Lollix said:
Right now, in many good quality locations in Spain, properties can be bought at below the cost of construction, making them an attractive option in my opinion for anyone taking a long term view.
Click to expand...

If the cost of construction continues to fall (i.e price of building land, materials and labour costs) as well as the falling demand for property, then what might seem attractive now, could of course be very bad value for many years to come.
 
Mit55 said:
If the cost of construction continues to fall (i.e price of building land, materials and labour costs) as well as the falling demand for property, then what might seem attractive now, could of course be very bad value for many years to come.
Click to expand...
That's valid, to a point. However there is a baseline below which materials can not go that is linked to factors such as oil prices etc, and that is also true of wage costs in construction. People will not work in a hard and dangerous job for the same rates that they could get from social welfare, it just doesn't happen.
The current sq.m costs in construction are now at an all-time low in Spain, but they were never very high in the first place. "Bubble" prices were not a factor of either high wage or materials costs, they were in the margin that was added on top.
 
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