Are there any BP who have invested in Spain? I am a US citizen and want to look at this hard. But am wondering if there is already a quality reservoir of information out there that folks are familiar with.
Are there any BP who have invested in Spain? I am a US citizen and want to look at this hard. But am wondering if there is already a quality reservoir of information out there that folks are familiar with.
Hi Arjun, I am from Colombia, and I have invested in real state over there, however I have lived the last 6 years in Spain, I exactly arrived when the economic recession started :/ However, living in the South of Spain (La costa del Sol , Andalusia) and observing how the prices have tragically decreased through the years I have finally decided to get into the business here,.. In my opinion, i dont think the price can get lower than now which means that from here they will slightly start going up, I reckon it might be very slow, but unless you are in a hurry to sell, i think it can be a very good investment with the years; by now, apart from enjoying the great enviroment and food here, you can also rent it, in high season you can get really good money by renting to foreigners (especially English and Nordics) that follow the spanish sun even in winter!
Anyone I know who invested in Spain in the last ten years took a bath and I know a lot of people who did. Lots of scams there too, especially in the resort areas.
Also the property laws there are very different to here. Then there's the language barrier.
Dare I ask - why Spain?
Spain is in very bad shape economically right now with extremely high youth employment and occasional riots. The USA is still the best country in the world for investing (and freedom) and I really have been around.
In my opinion, for what it's worth, leaving the USA to invest in Spain would be like leaving a great party to go to a wake!
Good luck with your decision!
Yes, I have some buddies who are buying up condos in the South of Spain for cheap. They are extremely confident a Euro nation will rise. And they seem to be loving the culture. Spain is where the deals are right now. And Detroit of course.
Are there any BP who have invested in Spain? I am a US citizen and want to look at this hard. But am wondering if there is already a quality reservoir of information out there that folks are familiar with.
Hi Arjun, I am from Colombia, and I have invested in real state over there, however I have lived the last 6 years in Spain, I exactly arrived when the economic recession started :/ However, living in the South of Spain (La costa del Sol , Andalusia) and observing how the prices have tragically decreased through the years I have finally decided to get into the business here,.. In my opinion, i dont think the price can get lower than now which means that from here they will slightly start going up, I reckon it might be very slow, but unless you are in a hurry to sell, i think it can be a very good investment with the years; by now, apart from enjoying the great enviroment and food here, you can also rent it, in high season you can get really good money by renting to foreigners (especially English and Nordics) that follow the spanish sun even in winter!
Spain is in very bad shape economically right now with extremely high youth employment and occasional riots. The USA is still the best country in the world for investing (and freedom) and I really have been around.
In my opinion, for what it's worth, leaving the USA to invest in Spain would be like leaving a great party to go to a wake!
Good luck with your decision!
I agree with David. Few of my friends invested in Resorts and had a hard time.
Does anyone know what the legalities are for US foreigners to buy and own property in Spain?
This is a fantastic time to be looking at Spain as the prices are at lows and starting to come back up. The time to buy is when things can't get any worse. Of course, everyone must do their due diligence and have a team they can trust. However before actually investing, I am interested in understanding what I need to know as a US citizen owning property in Spain. Property rights, taxes (Spainish and US), etc.
Hi Richard
I am originally from the UK but have lived and worked in Spain since the seventies, I also have over thirty years experience in direct real estate sales and rentals in Spain. Currently, I run a real estate portal for Spain.
During my years in real estate here I have always wondered why more Americans don't invest over here. I realise that you have California and Florida that matches Spain's climate, but the culture naturally is different here, and that's what makes it interesting.
US citizens can of course invest here the same as any European. I'm no expert on the tax point of view for US buyers in Spain, but I would be more than pleased to point you in the right direction with regard to property investment in Spain. I speak Spanish fluently and I could be assistance to you.
Don't hesitate to contact me with further questions.
Kind regards
Robert Edwards
LPG SPAIN.
Hi Arjun.
I'm Borja, based in Spain since I was born, and I don't recommend to invest in Spain market for the following reasons:
· Income tax + Wealth tax (depending on the region).
· New Solidarity Tax on Large Fortunes at the national level.
· Municipal capital gains tax when selling.
· Rental taxation (deductions reduced from 60% to 50% or less in many cases).
· Anti-landlord regulation.
· Squatting risk (Legal processes to recover a property take months or even years).
· Prices at historical highs
· Hidden bubble driven by tourism and funds.
· Interest rate and ECB dependence:
· Even if the ECB lowers rates, Spanish banks keep tightening mortgage conditions.
· BRRRR-style leverage is far harder than in the U.S.
· The Laborist Party wants to:
· Proposals to expropriate empty homes.
· Restrictions on short-term rentals.
· New municipal taxes being discussed.
So there is a lot legal insecurity risky.
The risk on US markets is compensated with higher returns.
For that reason, I'm trying to invest on the US market so I could have some passive income in the future.
Kind regards
Borja Antolin
Hi @Borja Antolin Pargada, you make it sound like it is not possible to do any good deals in Spain. There are things to have in mind and challenges to overcome, but watch out for thinking that the grass is greener and all perfect on the other side.
What kind of returns are you searching for?
You’re right — no market is perfect, and of course Spain still offers opportunities if you know how to navigate them. My point was more about the legal and regulatory insecurity, which makes it hard to build a scalable portfolio here compared to the U.S.
In terms of returns, I’m aiming for:
Cash-on-cash: around 8–12% annually.
Overall ROI (including appreciation): ideally 12–15%+.
Cash flow positive from the start (or shortly after rehab).
That’s why I’m looking more closely at the U.S. market (or maybe other markets) — especially strategies like BRRRR (although I heard that currently it's a bit difficult to do it) or long-term rentals in landlord-friendly states (something as "seller financing")
What type of deals and returns are you usually seeing in your market right now?
Best regards,
Borja Antolin
Agree 100%, Borja. Most opportunities for decent profits (like the ones you mentioned) involve significant legal risks (e.g., STRs, colivings) that aren’t present in many other markets. It also doesn’t help when too many brokers/operators push poor deals under false pretenses to international investors—but I suppose that’s part of the game.
In my view, the bubble is real and current price levels are unsustainable in the medium to long run (especially for locals). Still, let’s see how things play out over the next five years.
True, the BRRRR method is more difficult to apply in Spain.
Besides that, having your criteria in mind, it is also true that usually more creative rental methods are applied, however, at the same time, you can find a lot of distressed properties where you can hit these numbers. It depends on how well you're buying, but that will be the same in the US.
By the way, I'm reading more and more US people are also choosing the coliving rental method as it boosts their rental yield.
Are you looking for traditional buy-to-let properties? Could you share a case study and the area where you are looking?
True, the BRRRR method is more difficult to apply in Spain.
Besides that, having your criteria in mind, it is also true that usually more creative rental methods are applied, however, at the same time, you can find a lot of distressed properties where you can hit these numbers. It depends on how well you're buying, but that will be the same in the US.
By the way, I'm reading more and more US people are also choosing the coliving rental method as it boosts their rental yield.
Are you looking for traditional buy-to-let properties? Could you share a case study and the area where you are looking?
Thanks Erwin, I really appreciate your input. For me, the main goal isn’t capital appreciation but stable monthly rental income. That’s why I’m less interested in models like co-living or STRs, since they usually bring higher legal/regulatory risks and more volatility.
I’m mainly looking at traditional buy-to-let properties that can provide positive cash flow from day one, even if appreciation comes later.
Out of curiosity, in your experience in Barcelona/Valencia, have you found distressed properties that realistically work for that type of strategy (monthly net income), or do they mostly make sense for investors willing to take more creative/short-term risks?
From my perspective as a property owner on both sides of the Atlantic, including Spain (and spreading my time between both sides), I strongly disagree with your comments, especially when I'm so grateful that my Spanish bank gives me what's akin to free money, even though I'm neither a Spanish resident nor a Spanish national
Borja, as @Erwin Groenendijk hinted, your list about what's wrong about Spanish real estate investing might be a bit over the top (a lot in my humble opinion) and I could write an equivalent list about why you shouldn't invest in the US or in any other country for that matter. I've invested successfully in Spain (so far) and I know many Americans who have too.
Maria, I'm not sure what bubble you're talking about. If you want to see what a real bubble looks like, you should visit this side of the Atlantic, as we have plenty of those.
It doesn't make sense to me why European residents would want to invest in the US. True, as Borja and Erwin suggested, banks are much more flexible in the US than in Spain but what matters way more in wealth building is the level of interest rates and there is no contest there.
Normally, banks worldwide only lend to their own citizens, there are citizens and there are Spanish and American banks that will lend to non-residents.
A Spanish resident could get an interest rate as low as 2.5% and a non-resident would pay 2.9%. Inflation is running at 2.2% in Spain currently so that means a real interest rate of 0.3% to 0.7%. That's the closest you can get to free money, especially as we know that real inflation is likely higher).
If you invest in the US, you'll have to pay an interest rate of at least 7.5% while US inflation is at 2.7% so you'll pay 4.8%+ above the level of inflation, almost a 40-year high. Why you would go for that instead of the quasi-free money you can get at home is beyond my comprehension. And good luck to get cash flow at that level of interest rates when real estate is already very unaffordable for the locals.
Given this interest rate differential, you can create way more wealth much quicker with an average deal in Spain than with the best needle-in-the haystack deal you could find in the US. If you don't believe me, just do the math. It's mind boggling. The level of interest rates is the main determinant of wealth building in real estate.
Investors in countries like Spain, Portugal and other European countries don't realize their luck, until they try to borrow on the other side of the Atlantic. People this side would dream to have your interest rates (and also your real estate prices that are much lower than ours) and the only way to get that for us is to invest in Europe.
I think we’ve touched on this before 🙂. I don’t claim to know the entire Spanish market, but as far as Valencia (capital) is concerned, I stand by my view: most residential opportunities in the open market that offer an attractive yield are limited to very specific types of projects (co-living, short-term rentals, etc.). These carry their own significant risks, and in my opinion, the potential returns don’t adequately compensate for those risks.
As for the local “bubble,” price-to-income and rent-to-price ratios have already stretched to unsustainable levels in many neighborhoods.
That said, my analysis is very localized and may not apply to suburban areas or other regions.
Edit — One more thing: I hear you, and of course I agree about the importance of interest rates—only a fool would dismiss them. That said, my analysis isn’t focused on the US. I wouldn’t invest there anyway, even though I believe the potential for capital appreciation is much greater than in the EU. It’s simply a market I don’t know well, aside from observing its spectacular price increases.
Yes, I remember but I have hopefully an even better answer this time around 🙂.
I order to have a bubble, you need prices to go to up to an unsustainable level and then drop significantly, because, ultimately, by definition, a bubble has to pop to be a bubble. A bubble is about prices and prices are determined by willing buyers and sellers What you're saying is that you won't be a buyer because the rental yields are too low and, presumably no other (rational) investors will either so, at some point, the sellers will have no choice but adjust their prices downward significantly until the yield is satisfactory, which will pop the bubble. You humbly suggested that you don't know for sure that this will happen so I guess you're not sure it's a bubble.
I think the rental yield is a very poor bubble indicator that most market participants don't care about. While I likely don't know the Valencia market as well as you do (maybe @Erwin Groenendijk can comment), I'm going to illustrate my point with a kinda similar market that I know well: Malaga.
In Malaga, long-term rental investors represent a minority of buyers. The overall majority of buyers are owner-occupiers, second home owners and short-term rental investors. When these buy and sell, they don't care about long-term rental yields and prices are determined by supply and demand, not rental yields and so it doesn't matter how high those are.
The counter-argument would be that apartment buildings are likely mostly bought and sold by long-term investors. However, as you hinted at yourself, these investors could still make higher prices work by focusing on STRs or co-living. And, even if that wasn't the case, you couldn't have a situation in which apartment buildings don't follow the rest of the market up. Indeed land and buildings have an intrinsic value and, if prices are too low, people could but and convert or destroy and rebuild.
To conclude, what would I do if I was in your situation? Of course, nobody forces you to invest in local long-term rental real estate if the yields aren't good enough. You might as well invest in the stock market, although you couldn't use the benefit of leverage (or I should say you shouldn't because I do borrow against stock holdings at an even lower interest rate than your mortgage rates but it's risky and only experienced and very knowledgeable stock investors should do that in my opinion).
Mind you, it might still be worth investing in local long-term real estate as long as you're cash-flow positive, even if the profit isn't to your expectations. Indeed, as so many of the podcast guests (and hosts) repeat here on BP, real wealth in real estate is created through capital appreciation, not cash flow. And, even if there was to be a market correction at some point, you would be able to create a large amount of wealth over time through capital appreciation by borrowing at such low interest rates.
Yes, I remember but I have hopefully an even better answer this time around 🙂.
I order to have a bubble, you need prices to go to up to an unsustainable level and then drop significantly, because, ultimately, by definition, a bubble has to pop to be a bubble. A bubble is about prices and prices are determined by willing buyers and sellers What you're saying is that you won't be a buyer because the rental yields are too low and, presumably no other (rational) investors will either so, at some point, the sellers will have no choice but adjust their prices downward significantly until the yield is satisfactory, which will pop the bubble. You humbly suggested that you don't know for sure that this will happen so I guess you're not sure it's a bubble.
I think the rental yield is a very poor bubble indicator that most market participants don't care about. While I likely don't know the Valencia market as well as you do (maybe @Erwin Groenendijk can comment), I'm going to illustrate my point with a kinda similar market that I know well: Malaga.
In Malaga, long-term rental investors represent a minority of buyers. The overall majority of buyers are owner-occupiers, second home owners and short-term rental investors. When these buy and sell, they don't care about long-term rental yields and prices are determined by supply and demand, not rental yields and so it doesn't matter how high those are.
The counter-argument would be that apartment buildings are likely mostly bought and sold by long-term investors. However, as you hinted at yourself, these investors could still make higher prices work by focusing on STRs or co-living. And, even if that wasn't the case, you couldn't have a situation in which apartment buildings don't follow the rest of the market up. Indeed land and buildings have an intrinsic value and, if prices are too low, people could but and convert or destroy and rebuild.
To conclude, what would I do if I was in your situation? Of course, nobody forces you to invest in local long-term rental real estate if the yields aren't good enough. You might as well invest in the stock market, although you couldn't use the benefit of leverage (or I should say you shouldn't because I do borrow against stock holdings at an even lower interest rate than your mortgage rates but it's risky and only experienced and very knowledgeable stock investors should do that in my opinion).
Mind you, it might still be worth investing in local long-term real estate as long as you're cash-flow positive, even if the profit isn't to your expectations. Indeed, as so many of the podcast guests (and hosts) repeat here on BP, real wealth in real estate is created through capital appreciation, not cash flow. And, even if there was to be a market correction at some point, you would be able to create a large amount of wealth over time through capital appreciation by borrowing at such low interest rates.
Thanks Mike, I see your point — cheap debt and long-term appreciation have indeed been the backbone of wealth building in many markets, including Spain.
What makes me cautious is that appreciation is never guaranteed, especially in markets heavily driven by second-home buyers, foreign demand and short-term rentals. All it takes is a change in regulation, taxation, or a downturn in tourism and the demand side shifts quickly.
On top of that, Spain has a very particular legal issue that most markets don’t: the squatting problem. As an owner, you can lose control of your property for months or even years if it’s occupied, and low interest rates don’t protect you from that.
That’s why I tend to focus more on markets where financing, demographics, legal framework and property rights all work together to support both cash flow and appreciation over the long term.
PD: By the way, I'm based in Malaga my entire life and I know how the market works.
@Borja Antolin Pargada yes, we are still finding a lot of properties for long-term rentals that fit your criteria as a traditional rental. We were doing a webinar lately in which we showed how, in Sabadell, a city right next to Barcelona, we found multiple properties that are potentially cash flowing 10%+ gross from day one. Also Lleida is a market that scores well typically in Catalunya. It is true that they would need a renovation upon buying them, as they are cheaper because of the state of the property. However, we were specifically looking for simpler renovations such as redoing the kitchen, bathrooms, flooring, doors, etc for around €15.000-€20.000. They worked either as a flip or a rental.
Regarding the squatting problem, although it is something real, it is not that it is happening every day. In fact, with my or our network's portfolio, almost none of the people have experienced it. It happened to us once with one of our coliving properties right before we wanted to start renting out the apartment. It can be mainly avoided by having people living in it as soon as the property is done, and, by the way, there are insurances that protect for these things happening, so that you would receive the equivalent of the rent.
@Borja Antolin Pargada yes, we are still finding a lot of properties for long-term rentals that fit your criteria as a traditional rental. We were doing a webinar lately in which we showed how, in Sabadell, a city right next to Barcelona, we found multiple properties that are potentially cash flowing 10%+ gross from day one. Also Lleida is a market that scores well typically in Catalunya. It is true that they would need a renovation upon buying them, as they are cheaper because of the state of the property. However, we were specifically looking for simpler renovations such as redoing the kitchen, bathrooms, flooring, doors, etc for around €15.000-€20.000. They worked either as a flip or a rental.
Regarding the squatting problem, although it is something real, it is not that it is happening every day. In fact, with my or our network's portfolio, almost none of the people have experienced it. It happened to us once with one of our coliving properties right before we wanted to start renting out the apartment. It can be mainly avoided by having people living in it as soon as the property is done, and, by the way, there are insurances that protect for these things happening, so that you would receive the equivalent of the rent.
That’s interesting — Sabadell and Lleida are not usually the markets people think of first, so it’s good to hear there are still properties with 10%+ gross potential. I can definitely see how light renovations can make them work.
For me, though, the key question is the net yield after taxes and risks. In Spain, the combination of taxation and regulatory exposure can quickly erode that gross return, so I tend to be cautious.
Regarding squatting, I’m glad to hear your portfolio has barely been affected, though from my perspective even a single case can be a big hit if your strategy is focused on stable monthly income. Insurance helps, but it doesn’t fully solve the underlying legal delays.
Out of curiosity, do you see those 10%+ gross deals still making sense once you factor in taxes, community costs, vacancy and management?
When I had done research in investing in Spain, the challenge was they have their own form of rent control laws and it is pretty extreme in favor of tenants.
I think it depends on what your goals are. I would also look into the tax implications. I would want to know if I'm getting taxed in Spain and the US and how all of that would work.
When I had done research in investing in Spain, the challenge was they have their own form of rent control laws and it is pretty extreme in favor of tenants.
I think it depends on what your goals are. I would also look into the tax implications. I would want to know if I'm getting taxed in Spain and the US and how all of that would work.
Thanks Rick, that’s exactly one of my main concerns. For my goals — building a portfolio that provides reliable monthly income — Spain’s rent control and tenant-friendly laws make it much harder to project stable returns.
And you’re right about taxes too: once you add up Spain’s high taxation plus potential cross-border implications, the net yield can get very thin.
That’s why I tend to focus more on markets where the legal framework and taxation are more predictable and favorable to investors.
I generally won't invest in long-term rentals and the many foreign/American investors I've met who invest there wouldn't either. We generally invest in short-term rentals because it's much more profitable and less risky, assuming you do it where there is a market for it though. This is particularly fitting in Spain, given that it's the second most visited country in the world, only behind France and ahead of the US.
From a taxation point of view, assuming that you are both a US national and a US resident, you would pay taxes in Spain and the US but you could credit your Spanish taxes against your US taxes, as permitted by the Convention between the United States and Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion was originally signed in 1990, with a significant protocol amendment ratified in 2019. I'm no US tax advisor so don't take my word for it though.
I'm well aware of the squatter issue, which exists everywhere but is more prevalent in certain European countries indeed. However, as mentioned by Erwin, the risk is very low so I personally don't mind. Return goes along with risks and I understand that, if I want risk-free investing, I should buy government bonds instead of investing in real estate. Of course, everyone has his/her own risk sensitivities and maybe you have experienced issues arising from squatting or you know people who have, who might make you more sensitive to that issue.
When it comes to taxes, I assume that you're alluding to the income and/or capital gains taxes, given that real estate taxes are much lower than in Spain. I don't know if you're aware but, as a Spanish resident, you'd have to pay Spanish-level taxes on the income and capital gains you'd generate in the US (see my answer to Rick above - in reverse) so I'm not sure why Spanish taxes would be a reason for a Spaniard to invest in the US.
I generally won't invest in long-term rentals and the many foreign/American investors I've met who invest there wouldn't either. We generally invest in short-term rentals because it's much more profitable and less risky, assuming you do it where there is a market for it though. This is particularly fitting in Spain, given that it's the second most visited country in the world, only behind France and ahead of the US.
From a taxation point of view, assuming that you are both a US national and a US resident, you would pay taxes in Spain and the US but you could credit your Spanish taxes against your US taxes, as permitted by the Convention between the United States and Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion was originally signed in 1990, with a significant protocol amendment ratified in 2019. I'm no US tax advisor so don't take my word for it though.
I'm well aware of the squatter issue, which exists everywhere but is more prevalent in certain European countries indeed. However, as mentioned by Erwin, the risk is very low so I personally don't mind. Return goes along with risks and I understand that, if I want risk-free investing, I should buy government bonds instead of investing in real estate. Of course, everyone has his/her own risk sensitivities and maybe you have experienced issues arising from squatting or you know people who have, who might make you more sensitive to that issue.
When it comes to taxes, I assume that you're alluding to the income and/or capital gains taxes, given that real estate taxes are much lower than in Spain. I don't know if you're aware but, as a Spanish resident, you'd have to pay Spanish-level taxes on the income and capital gains you'd generate in the US (see my answer to Rick above - in reverse) so I'm not sure why Spanish taxes would be a reason for a Spaniard to invest in the US.
@Borja Antolin Pargada they make a lot of sense as many of them were still at 8%+ net after deducting all costs. Vacancy, management, and community costs are usually low in these traditional rentals. The taxes are what they are; however, there are tax deductions and investing via a company would provide other potential benefits.
In the end, it depends on one's convictions and preferences.
Please feel free to share case studies of what you are coming up with, including the numbers on how the deals make sense. It might be a motivation for all of us in this group, including me, to consider doing the same.