Today it seems better than ever, especially in the housing market with the most affordable mortgages so far. The return offered by the property market is much higher than that offered by 10-year government bonds: 0.2%, for example.
According to the latest data published by the Bank of Spain, in Spain the gross return on housing rental is 3.9%. A figure that rises to 10.7% if we add the revaluation of its price, that is, the capital gain obtained by selling that same property.
It is essential to analyze the real estate market in order to know which assets offer the highest profitability. At the moment, offices are positioned as the property product that offers the highest profitability in the rental market. The gross profitability of the purchase of offices for rent in the market has grown to 9.6%, thus increasing the distance from the investment in housing or commercial premises.
The location of the property has a direct influence on the return on the investment. It is not the same to buy a property in a big city than to buy it in a secondary area or in something; neither is it the same benefit to buy it in the city centre or in the periphery.
The big cities are still, in general, the most profitable places, although there are many other Spanish municipalities with power and other types of real estate investment capable of offering very attractive returns. Commercial premises, offices, garages and warehouses and industrial land are some examples.
Whether or not we make a profitable property investment also depends on the time of year we choose for it. Normally, if you are looking for a house, the first is the season most people choose to buy a house, which means that the price of these assets is higher.
Therefore, the return of the holidays makes August and September the most suitable months for our investment.
Before buying a property we have to analyze the size of the property we are interested in due to the fact that it will influence the subsequent sale and rental. A priori it is easier to sell a small flat than a large mansion, but everything will depend on our investment capacity.
We always recommend that you find out about these concepts and their corresponding amounts before making the purchase in order to know in advance what the disbursement we will have to make for this concept will be.
The purchase of a home involves the cost of the agency, the public deed at the notary’s office, the registration in the Property Registry, the payment of VAT if the home is new or the Property Transfer Tax if it is second hand, etc.
A reform means an extra outlay on our purchase. But buying a home and reforming it may increase its value by up to 30%.
For this reason, we should consider whether it is more worthwhile to buy a cheap property and reform it before selling it or to buy a new one directly.
After purchasing the property, we will have to add other fixed costs associated with the property such as the community fees, the amount of which depends largely on the facilities (swimming pool, garden, sports area, etc.) and the equipment the property has and its maintenance to ensure that it is in good condition, and the Property Tax which is paid annually.
Identifying and quantifying the profiles demanded by each type of property will help us to decide on one type of asset or another.
In this sense, luxury housing in the city centre is very attractive for singles, housing on the coast is for foreign buyers and small flats in areas further from the centre are a very interesting option for young students or hospital workers; and housing located in a residential neighbourhood on the fringes is ideal for a family.
Nowadays it is no longer necessary to have a large amount of capital saved in order to invest in this market. Thanks to the ease of access and the current financing conditions in the mortgage market, any person can access real estate projects by making a small contribution from their savings, financing the rest, and can even diversify their investments in various properties or types of property (homes, offices, premises).
We are experts in advising the small to medium sized investor, since we know the type of product they need, properties from 90,000 euros to 100,000 euros, and the areas of Orihuela where to locate it, and helping them to generate a rental return of approximately 6.5%.
We focus on those areas of Orihuela where there is a high percentage of sales and rentals, but if a client needs or has a preference for a particular area we will be pleased to help them locate and get a property where they indicate us.
As well as saving money and time, the client does not have to worry about the process of searching for and buying a property, which will provide a good return in the medium and long term, which is our objective.