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?
Thank you for your quick reply @Erwin Groenendijk! I need to study better the rent options, I was thinking in getting a 2br instead of a large place... Will reply to your PM.
Hi all.
Thanks for all your posts so far. I am also new to investing in Spain and was wondering if anyone had any experience bidding on properties through the government or bank auctions? Is this a good way to get properties below market value? What are the pitfalls one needs to be aware of?
Also it seems that everyone is doing flips. Isn't buy and hold a better strategy given the high transaction costs? Is anyone doing this, and what kind of yield can you expect?
I am looking around the Valencia region (but am currently living overseas), but will be sure to get in contact with you all next time I am back in town.
Thanks in advance!
Nathan
Regarding properties owned by the government, you need to be a multimillion dollar hedge fund to have access. There are exceptions. I have access because I know the right people but it is very rare.
When it comes to bank repossessions, there are no auctions. Again, you need to know the right people. No need to be a hedge fund but I can tell from my own experience that you need to appear as a serious party to talk to them and that is assuming that you find the right people to talk to.
Investing internationally has its own set of rules and so you can’t just blindly apply what you learn in the US or here, although many things are the same obviously.
As to flipping versus buy and hold, some people flip because they want to generate cash quickly, they like it or they think that the revenue generated by the properties is way too low compared to the price to make it work.
Also, remember that this is a US website so the number of people who invest in Spain and internationally and know about it is fairly limited. Also, the amount of people who invest in Spain here represent a tiny minority of the investors in Spanish real estate so you shouldn’t assume that what we’re doing is representative of what most investors do.
@Mike Lambert thanks for your insights. Maybe auctions aren't the way to go then!
@Nathan Williams @Mike Lambert
Mike is right here. The community of BP members active in Spain and Valencia is not representative for what is actually happening. More so, because people in Spain are more in to buy-to-hold activities. The idea comes across more simple, is more traditional, usually less renovation or moving parts happening, monthly steady income (if you do it right).
Regarding the auctions, you can talk to several banks and try to get a list of bank owned properties that they sell. As you know, they will give you the address but you can not go inside them. This makes it even more important that you know exactly what you are doing, especially if you are not from here or if you are not familiar with the Spanish language. It is true that these available bank owned properties are normally (not always) the last ones that are still left, meaning that the other (more) influential parties didn't want them.
Just let us know when you are in Spain so we can meet up and share our experiences and tips/tricks.
Hi guys!
How's it going? I developed several residential and commercial properties in Argentina, and our ongoing project is a twenty-story building.
Currently, we are looking to expand our real estate business to Spain and the US.
I'm travelling to Spain in February and March, to Madrid, Barcelona and Valencia (where I lived several years ago). I'm also taking up a program at IESE Bussines School in Barcelona about International Real Estate.
I have a few private investors who are also interested to invest in Spain.
It's going to be great to be in touch with you guys and meet up.
This is my LinkedIn profile https://www.linkedin.com/in/juan-pablo-balboa/
Regarding to Madrid, I know people who are doing it great flipping houses right now, so I think never is too late, even in Madrid, but obviously it requires a deep understanding of the city, difficult to make it without that.
Hi @Account Closed, what can you offer here exactly? We could be interested for some of our RE projects in Spain that need refinancing. Regards
Hi @Juan Pablo Balboa and @Erwin Groenendijk.
Juan Pablo, I sent you a colleague request in order to discuss further.
Erwin I ended up, not buying this summer in Spain, I am buying in the next months my second property here in Virginia (USA). After I calculated everything, taxes, rehab and financing and I also took in consideration the state of the economy, plus I currently live in the US. All this reasons made me decide to buy here in the near future. Thanks for all the help you provided Erwin.
Thanks @Joaquin Camarasa. We’ll be in touch then.
Your approach sounds really interesting.
Hi @Joaquin Camarasa, pleasure and let's plan for the next time to also meet for when you are here. Curious to hear more about what you are after buying in Virginia
Hello and thank you all for this amazing thread! Been a pleasure to read.
Google gave away your event at meetup, Erwin and Adria, at 19. feb, and I am super excited for it! Even more now that I find your amazing contributions on here.
Myself, moved from Norway to just south of Barcelona 1 year ago, just been learning spanish along with real estate and now ready to make the move to buy my first deal. My focus will be outside Barcelona in the smaller areas, as of Viladecans, Gava and Castelldefels in the first round. I am with little previous experience so going for cheaper units. There is less entry and some in bad conditions that could need a lift, so I see it as a way of gaining experience and hopefully some gains.
I am paying close attention on here, and will be sending you guys a request. Would love to follow your journeys!
Hi @Morten Lund Kirkvik, nice to meet. Nice that you are joining the Meetup, would be great to meet.
Would advise to don't choose too messed up apartments for your first deal, because although they can be cheaper at first, you could be spending quite some money on non-anticipated parts of the renovation. Btw, this is still happening to us after doing I don't know how many projects.
Let's talk on the Meetup but perhaps a good idea would be to join us to two apartments that we are renovating in a 3 floor building just outside Barcelona in the city called Terrassa. One is now finished and ready to sell, and the other still needs quite some work. You can see there how we are renovating it, how we work with our people, and how perhaps it could help you with a thing or two.
@Erwin Groenendijk I highly appreciate your suggestion, and I am up for it!
Very interesting conversation guys.
@Nathan Williams I agree with @Mike Lambert. Bidding on Spanish REOs is a painful process which most of the times ends in nothing, unless you are a hedgfund or a private equity shop.
I was fortunate to be on the team designing and implementing the restructuring of the Spanish financial system back in 2011. Banks would definitely sell to unload s**t from their balancesheet in order to look prettier to shareholder's and the ECB's eyes, but would focus only on massive transactions.
SAREB, which is not a bank, is not really interested in selling these properties despite the effort on pretending the opposite. My guess is that they will try to hold properties for longer looking for appreciation so its balancesheet looks stronger. We assisted a customer trying to buy a €5M+ building from SAREB and it was a pain in the back. Eventually we gave up.
As to flipping/holding, Mike's right again. We use both strategies depending on our needs, as they have different objectives that complement eachother. Flipping can be useful to manage short term cashflow needs and to build up some muscle.
@Morten Lund Kirkvik we own a couple of rental properties in Gavà and they are fantastic. The area's got a high demand for small and mid-sized apartments, which suit very well to pilots and plane crew members.
Hi, This is Marc from Barcelona checking in.
I am getting up to speed with real estate investing. I have most of my portfolio in the stock market, and I want to reduce the crazy volatility we are having recently adding rental properties. Starting with one, and if it works out 2-3 more.
Very interesting discussion, learning a lot so far. Thank you!
Hi @Marc Garcia, if you like you could come to our following meet up when the quarantine is over so we could meet in person and talk further. We are organizing an event every month in Barcelona. Let's stay in touch
That would be great. Please, keep me posted!
Very interesting thread. I'm also based in Barcelona and have just begun investing in rental real estate last year. @Erwin Groenendijk could you please also let me know when you schedule a new meetup in Barcelona when confinamiento is over? Thanks a million!
Thanks @Erwin Groenendijk, I've got your message about the meetup group. My rental property is a flat in Clot area, in Barcelona.
Hi all. I'm from the UK and have experience of buying and flipping houses. I have lived in Valencia previously (Ruzzafa) and I am considering moving back to Spain (either VLC or BCN) in January when my current renovation project in the UK is finished. I'm interested in developing co-living spaces (premium). Given the COVID situation I was wondering if there are any virtual meet ups happening?
Cheers
@Hayley Smith, we were thinking of organizing the physical meet ups again from September and for the time being organizing the virtual ones. The topic always differ, but as we are active in the coliving space in Barcelona/Valencia, we tend to talk regularly about the topic. Will send you a PM message with our meet up group to join so you will see what is coming.
Could you explain your coliving plan a bit further?
Hi all. Lucas here. I’m from California but based in bilbao for the last 11 years.
I know this area very well including some of Cantabria too. I also have a big networks with lawyers accountants contractors real estate agents and a few local investors in case anyone needs referrals.
I know a flippers and a few buy and hold people here.
With high acquisition costs in this area, I’ve heard most success coming from flipping or buying fixer uppers in older parts of Bilbao for around 100-150k and then renting them out per room for around 300 euros a month. For a 3 bedroom that is 900 and for a 4 bedroom that’s 1200.
I have t bought any investment properties myself since I’m still not sure if it makes more sense to invest in Spain or in the US.
Reasons are taxes for Americans abroad which can be complex. More creative financing options and tax advantages in the US. I do like the durable construction methods in Spain a d the low operating costs. But it seems that higher rentals and lower acquisition costs in the US + the tax breaks for real estate make the US more attractive for now.
I’ll have to learn more and talk a bit more with guys like Adri and Erdwin in this thread that seem to be doing lots of deals in Spain.
Anyways. Happy to follow this thread and thanks to everyone for contributing
@Adrià Creixell and @Erwin Groenendijk would be happy to chat a bit more to see what your latest projects are and hear about how things are going. Especially as we go into some interesting years with COvid effects on the markets.
@Lucas Rincon, whether you choose to invest in the US or here in Spain it doesn't really matter that much. Of course, it matters because there are different rules and regulations in both countries, but the most important thing is starting. You will find out that both countries can work if you have a good strategy and if you are consistent.
Our projects momentarily are going well. You have to do more and (normally) getting a bit less in these times. For example some decisions that we made that could have been better are being highlighted now and costing more effort to sell an apartment or selling for lower prices. Probably people are noticing that now in general in real estate.
Btw: we are thinking to come to Bilbao at one point to expand our coliving business. We are now mainly operating in Barcelona and a bit in Valencia.
Happy to chat a bit more if you send @Adrià Creixell or me a PM.