Best option to take when investing in Spain
Simpsonville, SC · Member since 2017 · 8 posts · 2 votes
Hello, this is my first post I'm new to the forum and I'm a newbie to the real estate world.
Does anybody have any experience in investing in Spain?
I'm currently living here and it's where I plan on starting my venture!
However..... after reading up on the numerous amount of taxes there are here during the buying and selling process I'm struggling to choose what path to take,
If anybody has had or is currently having success here I would love to here from you,
Thanks
Dear all,
It's great to see interest in Spanish real estate picking up! I was born in Barcelona but lived in London during the worst years of the financial crisis. Ironically, during the worst months, I was flying to Madrid on a weekly basis to assist the Spanish Government and European authorities to sort out the mess the property market was back then. It was extremely interesting and a huge personal experience.
Where to buy in Spain? As @Erwin Groenendijk mentioned, there are opportunities everywhere, so I guess it is only a matter of personal goals and preferences. As I believe it's been already said, the largest hedge funds bought thousands of heavily discounted properties in 2011-2013, unloading their investments as early as 2014-2016.
That being said, I think international investors should stick to big capital cities unless accompanied by very knowleadgeable experts. Alternatively, when investing in vacation areas, they should be able to bear a higher risk or at least be happy spending some time in their property if the market turns sour, hopefully enjoying some sunshine.
Although properties in Barcelona have strongly appreciated when compared to the worst times, there's still room for higher appreciation. Making offers 50% below the asking price (as @Adrià Creixell suggests) today may work only with desperate sellers. I'm not saying there aren't anymore, but finding them in today's market environment is surely more challenging than in it was in 2011, when I remeber buying with up to 60% discounts.
With regards to rents in Barcelona, I do believe they are high compared to the average disposable income, but I am afraid we are running towards a city model such as London and Paris. Would rents in Barcelona increase? Definitely. For how long? Who knows...because while salaries in Paris and London may sustain high rents, the average salary in Barcelona is relatively low vs. the rents.
I think @Aydin Ozturk knows what he does. Nearby cities with universities and good transportation to/from Barcelona will offer higher ROIs in the short term.
@Andrew Stephens Spanish law is very tenant-oriented, however, the length of the rental agreement is usually 1-3 years. Tenants have the right to stay if they wish up to 3 years (provided the pay the rent!). After 3 years, a new contract should be negotiated and signed in case they want to stay. Cities such as Barcelona have a high turnover and tenants move quite often (every 2-3 years).
Beware though that back in the old days (pre 1985), tenants could have right to a rent for life with very limited increases. So if you buy any property with an existing tenant, make sure they don't have one of those agreements or you'll regret buying a "cheap" deal.
To international investors, I definitely recommend hiring a local property expert who will guide and accompany you through the legal process. I wouldn't hire just a broker, but an expert who could help you finding the right property for you as well as any legal and tax matters. Ideally, they should coordinate with your home tax advisor.
Hope my experience is of use to some of you guys. Will be great to share more insights with you. What are you up at the moment? Any live deals?
Hello @David Fernandez,
"I believe that it is state specific (Andalucía, Catalonia, Madrid, etc.) not national, but he told me that if you form a business whose intention is buying and selling real estate, you only have to pay 3% tax when purchasing vs. the 10% we have to pay in barcelona, where I invest. Then, the profit is taxed as ordinary business profit. As long as you sell within 5 years, you only have to pay that 3%, if you hold it for over 5 years, then you have to pay the difference, and probably some sort of penalty (I added the penalty part, but knowing how things work in Catalonia/Barcelona, it isn't very likely that is the case)."
Answering your question, I think that the purchase tax it could be only discounted that way in Catalonia. At least, in Valencia is not possible.
Hello @Jim Robertson @Ben Fisher
Thanks @David Fernandez for mentioning us.
We have been flipping in Barcelona for 4 years and in Valencia for a year. If anybody of you have questions about, I will be happy to chat about the subject.
Cheers.
Before the crash in 2008, many speculators bought off-plan, preferably prior to construction. Stage payments kicked-in based on architect's certificates during the construction process. Naturally prices increased, sometimes as much as 30%+ during construction. The buyers then re-sold their option, taking their profit, without the need to complete before a notary thus saving legal expenses.
This is now happening again in Spain. However, if buying new construction you need to pay 10% VAT, and developers will most likely charge you the proportionate 10% vat on each stage payment. But if a construction project is scheduled to take, shall we say 2-3 years, and with present market conditions, I should imagine prices will rise favourably during this time. You can then sell-on the property prior to completion.
Prominent builders/promotors will also offer bank-guaranteed stage payments thus protecting your investment in the event of breach of contract. Tips: Make sure that your contract allows you to sell-on before completion. Use a Spanish lawyer. And shop around before you decide.
Dear all,
A lot of insights and a lot of ideas. Last month we came together in Barcelona with our second Meet Up discussing these topics in person with like-minded people. In the end, talking with each other is what helping you move forward. We are planning to host our third one in June, so if anyone is in the possibility of attending please feel free.
In Meet Up you can find our group under 'Real Estate Investors in Barcelona'.
Thank you for referring @David Fernandez. I think you were attending the very first one we organized. Glad to see that everything is going well.
Erwin
Hello, I am in Los Angeles, California. We have been thinking about flipping in Spain-- we have visited most cities, but like Bilbao, Barcelona. I was reading about gentrification in those cities. I've heard there are still some sketchy areas in Bilbao, such as the San Francisco neighborhood which is also a gay community. I don't really see how most of Bilbao has not gentrified, and how this neighborhood can't be "hot" in the years to come. Maybe I am just in LaLa Land ( which technically I am). Barcelona is expensive, I took a look at prices in the city, and unless I am going to the wrong sites-- I did not see any deals. I really like these two cities. Anyone out there have experience?? Even the outskirts of Barcelona, within a 30 minute radius would be great. The home prices are rather reasonable for what you get.
I am not too keen on Southern Spain, but if someone has experience there, please let me know. Help! Someone mentioned a meetup group. I will look it up and join as well, whereas I am very interested.
Cheers!
Susie
Hello @Susie Guerra
Me and @Erwin Groenendijk, we are succesful investors in Spain. In Barcelona and Madrid you're too late, I think, you need to look in 2nd Tier cities. Bilbao may be an option, but I don't really know how it looks the market over there.
Im originally from Valencia, i've lived in Madrid (Double MSc there, 5 years), Mallorca (1.5 y) and Barcelona (5y and counting) Although my family is from Bilbao (I've lived in Orange County, CA for a years too, but not that relevant, :P) . Im pretty knowledgeable of the spanish market. Lemme know if you need tips or help or are looking for bussines opportunities/partners.
@Tim Gordon @Jim Robertson @Ben Fisher @Tim Macy @Polina Lyu @David Fernandez
Hi all!
My name is Juan Carlos and I live in Barcelona. I'm also new in Real States, and I'm making my first investigations about the zone, numbers, and strategies. I'm pretty new in Spain, for this reason, I need be more in touch with specific laws and fiscality. This is really a good start point for me. I will read more!.
Nice to meet you!
Juan Carlos
Hi There!
I was planning to invest in buying 2 properties in spain and have a good rent yield ans capital gain. Where would you recommend to do so? Madrid, barceloan, Andalucia? Portugal?
Also, i am also interested in buying other 2 apartments to flip, my concerns are that you have to pay around 12% on taxes to buy the apartment and after that you need to pay taxes of 23% on capital gains. I think this is a lot and leaves almost no margin. Is there any loopwhole or best practice to avoid this? Do you know if Portugal or other countries are the same?
Best!
Hi @Fernando Cantini, nice to be reading your plans. In terms of where to invest there is only one answer: it depends. It depends where you know people you trust, people that deliver quality work, and people that can perhaps show you the rules on the ground. There are good opportunities to be created in every of these markets. We decided to run our projects in Barcelona and Valencia, the North-East if the country.
In terms of flipping multiple taxes per country apply. Don't forget that there are still nice gains to be made next to the taxes. In Spain it is 10% when buying an apartment, and 19% over the profit that you are making. In terms of loopholes, there are some. @Adrià Creixell is the one who can explain this best for Spain. Keep in mind though that you need to know exactly what you are doing going this way. Only more reason to find people who can give you the guidelines.
Are you new into real estate? How did your interest arise?
Erwin
Hi Erwin, 19% is over the profit you make but if you are not doing business. I think that if you are doing business as an individual instead of paying Capital Tax you need to pay Earning income on the Flip that goes from 21% to 46$ I m I RIGHT?
Or maybe you can still do business flipping and pay Capital Gains only (19%) ?
Or maybe is better to start a real estate company and the first 2 years pay 15% and then you will have to pay 25% as business earnings?
What are your thoughts and your advise?
I am trying to maybe flip 1 apt per year, not that much so I dont know if it is worth it to open a business for it, maybe you can pay as capital gains (19%) since I am not planning to o a lot of Volume.
Does portugal have the same tax when flipping?
My dad does real estate in Argentina, he has been doing that for the past 40 years and he is going to come with me to spain and guide me a little bit, but is a different market, different rules.
Hi Fernando,
Either as a company or as an individual, you will be paying the profit tax of 19%. This is at least in Spain, and it can go up depending on how much money you are earning. Up to 24% if I am not mistaking. As you are planning to flip one apartment per year, it would not be necessary to open a company for that. But ask a legal adviser that question to be sure :-)
For Portugal questions, I have to again refer you again to @Adria Creixell in that he has more knowledge about that market.
Erwin
Hi everyone!
Me and my company are working close with new developments in the southern of Spain and there are no doubts that there are a LOT of great investment opportunities for those of you who are looking to invest in real estate from an early stage, either you are looking for a quick return og investing long term.
If you have any questions or want to know more, just hit me up on my email in my profile!
Will gladly respond to any question (almost)!
Øystein
Hello @Adrià Creixell ,
I figured Barcelona and Madrid were out of the question based on the prices. It doesn't make sense. Although someone mentioned low rent prices in Barcelona. I searched rentals and I thought they were more on the high side.
I am planning a visit to Spain to have a look. I still think Bilbao might be a good option since it's a mid-sized city with good potential. I never even considered San Sebastian because of the high prices. I also like Santander, but it looks to be more of a port town. I just read the comment on Southern Spain being good potential...Are people talking about the really touristy areas where the Brits holiday ( malaga, marbella)?
I love this thread, I am gaining a lot of information. Thanks to all!
Best,
Susie
Hello @Adrià Creixell ,
I figured Barcelona and Madrid were out of the question based on the prices. It doesn't make sense. Although someone mentioned low rent prices in Barcelona. I searched rentals and I thought they were more on the high side.
I am planning a visit to Spain to have a look. I still think Bilbao might be a good option since it's a mid-sized city with good potential. I never even considered San Sebastian because of the high prices. I also like Santander, but it looks to be more of a port town. I just read the comment on Southern Spain being good potential...Are people talking about the really touristy areas where the Brits holiday ( malaga, marbella)?
I love this thread, I am gaining a lot of information. Thanks to all!
Best,
Susie
Hi @Susie Guerra,
Me and my partners, we are strong in Catalunya and Valencia city (network and knowledge). Let us know if you could help you in anyway.
From my point of view, If I was going to buy a property to rent it, what I will do is to visit MANY properties, and making really low offers (like 50% discount) on the market/city/area that I'm interested. Doing that you could reach 10% yields or more. But it's time consuming. And if you don't know the city could be risky.
Good luck!
Hello @Adrià Creixell and others.
I'm based in BCN also looking for value added deals. If there is a meet up sometime soon, please let me know!
Thanks
@Shawn Stocker, sending you a private message. Together with Adria, we are hosting a RE meet up in Barcelona in which we are now planning the next one.
Dear all,
It's great to see interest in Spanish real estate picking up! I was born in Barcelona but lived in London during the worst years of the financial crisis. Ironically, during the worst months, I was flying to Madrid on a weekly basis to assist the Spanish Government and European authorities to sort out the mess the property market was back then. It was extremely interesting and a huge personal experience.
Where to buy in Spain? As @Erwin Groenendijk mentioned, there are opportunities everywhere, so I guess it is only a matter of personal goals and preferences. As I believe it's been already said, the largest hedge funds bought thousands of heavily discounted properties in 2011-2013, unloading their investments as early as 2014-2016.
That being said, I think international investors should stick to big capital cities unless accompanied by very knowleadgeable experts. Alternatively, when investing in vacation areas, they should be able to bear a higher risk or at least be happy spending some time in their property if the market turns sour, hopefully enjoying some sunshine.
Although properties in Barcelona have strongly appreciated when compared to the worst times, there's still room for higher appreciation. Making offers 50% below the asking price (as @Adrià Creixell suggests) today may work only with desperate sellers. I'm not saying there aren't anymore, but finding them in today's market environment is surely more challenging than in it was in 2011, when I remeber buying with up to 60% discounts.
With regards to rents in Barcelona, I do believe they are high compared to the average disposable income, but I am afraid we are running towards a city model such as London and Paris. Would rents in Barcelona increase? Definitely. For how long? Who knows...because while salaries in Paris and London may sustain high rents, the average salary in Barcelona is relatively low vs. the rents.
I think @Aydin Ozturk knows what he does. Nearby cities with universities and good transportation to/from Barcelona will offer higher ROIs in the short term.
@Andrew Stephens Spanish law is very tenant-oriented, however, the length of the rental agreement is usually 1-3 years. Tenants have the right to stay if they wish up to 3 years (provided the pay the rent!). After 3 years, a new contract should be negotiated and signed in case they want to stay. Cities such as Barcelona have a high turnover and tenants move quite often (every 2-3 years).
Beware though that back in the old days (pre 1985), tenants could have right to a rent for life with very limited increases. So if you buy any property with an existing tenant, make sure they don't have one of those agreements or you'll regret buying a "cheap" deal.
To international investors, I definitely recommend hiring a local property expert who will guide and accompany you through the legal process. I wouldn't hire just a broker, but an expert who could help you finding the right property for you as well as any legal and tax matters. Ideally, they should coordinate with your home tax advisor.
Hope my experience is of use to some of you guys. Will be great to share more insights with you. What are you up at the moment? Any live deals?
Hello everybody,
I am totally new to property business and looking for investment in Spain, especially in Valencia, as I am planning to move in Valencia within couple years.
Dear @Adrià Creixell is flipping in Valencia is a good option, what kind of return can be expected. For i.e. if I buy 2 bedroom apartment in Ruzafa district with price 170-200KEUR . is it real to get 15-20K profit out of it.
Thanks a lot!
Yes, if you find good flats for that price in Ruzafa is pretty easy to make 15-20k. There are many operations with that kind of ROI, but you need to know what are you buying...
Hi @Jamil Azimov, it for sure is possible to earn that profit flipping in the Ruzafa area. Like @Adrià Creixell is saying, it is essential to know what you are buying and have a team to work with. Do you have any experience in real estate in general?
Yes, if you find good flats for that price in Ruzafa is pretty easy to make 15-20k. There are many operations with that kind of ROI, but you need to know what are you buying...
Thank you for information!
Hi @Jamil Azimov, it for sure is possible to earn that profit flipping in the Ruzafa area. Like @Adrià Creixell is saying, it is essential to know what you are buying and have a team to work with. Do you have any experience in real estate in general?
Hi @Erwin Groenendijk, unfortunately I don't have any experience, except the ones i did for myself at home, but I am totally looking into it, have already purchased an apartment in Valencia and will start flipping by the end of this month, negotiating the price for refurbishing at the moment. Here are the figures: purchased 3 bedroom 81 sq.m. apartment for 170K (190K incl all taxes and fees), second floor with lift. Will turn it into 2 bedroom apartment with two bathrooms, planning to spent around 34-38K to flip. I hope to finish everything by the mid February. Very excited about it and if it will work out I definitely will continue to invest in property.
@Jamil Azimov, where did you buy the property? In the city center of Valencia? And the plan is to flip it right?
@Jamil Azimov, where did you buy the property? In the city center of Valencia? And the plan is to flip it right?
I bought in Ruzafa area, in Matias Perrello street, yes I am planning to flip it. Hope to finish by the mid of February