Rental Property Investor · Dallas, TX · Member since 2017 · 3 posts · 0 votes
I am a newbie in real estate investing. I have a few properties in the US primarily for generating a regular cash flow. I would like to explore European real estate market, specifically, Spain with the same investment goal - cash flow. The questions that I have are:
Is it possible to generate positive cash flow (rent - mortgage - operating expenses resulting in positive number) in Spain?
I live in Dallas, TX. What kind of challenges do you run into in managing Spain properties remotely?
Has anybody done it successfully that lives in Dallas, TX or nearby cities? If yes, would you be open to meet me in person and chat?
Have additional questions after these initial ones.
Appreciate your experience-based responses. Thanks,
In my opinion the biggest advantage when investing in Real Estate in Spain versus the US is the adquisition prices and the construction costs. They are both lower in Spain and therefore you are able to get more bang for your bucks. Another interesting "advantage" depending on how you look at it, in the case of "fix and flips" is that remodels in Spain do not go through as many city inspections as they do in the states. Depending on how extensive the renovations are, in many cases the architect that draws the renovations plans and helps obtain the building permit is then allowed to supervise the works by signing a "declaration as the responsible supervisor" and the city inspector comes at the end for a final sign off, allowing therefore for a faster construction timeline. Of course the work has to be done according to current building codes, however, the same scenario in many places in the states (specifically in California) is completely different, because you have to schedule a city inspection for each construction milestone (rought electrical, rough plumbing ing, sheetrock, stucco and so on) and each inspection could take 4-6 weeks before the inspector is available to come to the site (at least that is the case in the bay area). So basically the same project could take a year as far as the actual construction in the states, while in Spain (at least in Valencia area) the construction part would take half that time or less. For example. As we all know time is money, so that time saved translates into less interest paid to the lenders and more projects under your belt.
@Shital Thakkar This is a very broad topic to discuss, however in general the difference in language and regulations are topics to take into consideration. For buying a property in Spain you have to pay 10% of transfer tax for example. The after per month costs are then again way lower as in the US. Depends on where you invest specifically in the country but on average the prices are lower in Spain than what you are used to in the US. This makes that you can do more with your money here in Spain than in the US.
Also interesting to hear @Africa Estrada's opinion. She is from Valencia originally and lived for a long time in the US, before now deciding to come back to Valencia, Spain again. We are working together on some projects and she is saying that the biggest difference is the amount of opportunities in Spain still available & the mentality of the people towards real estate. The country is not that exploited in terms of real estate yet. It is not a big hype to be flipping houses in creative ways of financing, for example. This can bring advantages and disadvantages of course.
Hi @Ravi Kulkarni, there are multiple reasons but one of them would be that it would become possible to live in the beautiful country of Spain some time for yourself as well. I am from the Netherlands, but chose to do the same 4 years ago.
Of course it is possible to generate positive cash flow in Spain, however the real question is for what amount of cash flow or yield you are searching for. On average the rental amounts are not that high here in Spain, but if you are creative you can always find something that works (for example, renting out to expats, students, or per room)
Managing a property remotely in Spain has its challenges like managing any property remotely. You are not there, so it is really important to have a trusted person on the ground. Also the language is different and the rules & regulations, but that is something to overcome easily.
@Shital Thakkar This is a very broad topic to discuss, however in general the difference in language and regulations are topics to take into consideration. For buying a property in Spain you have to pay 10% of transfer tax for example. The after per month costs are then again way lower as in the US. Depends on where you invest specifically in the country but on average the prices are lower in Spain than what you are used to in the US. This makes that you can do more with your money here in Spain than in the US.
Also interesting to hear @Africa Estrada's opinion. She is from Valencia originally and lived for a long time in the US, before now deciding to come back to Valencia, Spain again. We are working together on some projects and she is saying that the biggest difference is the amount of opportunities in Spain still available & the mentality of the people towards real estate. The country is not that exploited in terms of real estate yet. It is not a big hype to be flipping houses in creative ways of financing, for example. This can bring advantages and disadvantages of course.
In my opinion the biggest advantage when investing in Real Estate in Spain versus the US is the adquisition prices and the construction costs. They are both lower in Spain and therefore you are able to get more bang for your bucks. Another interesting "advantage" depending on how you look at it, in the case of "fix and flips" is that remodels in Spain do not go through as many city inspections as they do in the states. Depending on how extensive the renovations are, in many cases the architect that draws the renovations plans and helps obtain the building permit is then allowed to supervise the works by signing a "declaration as the responsible supervisor" and the city inspector comes at the end for a final sign off, allowing therefore for a faster construction timeline. Of course the work has to be done according to current building codes, however, the same scenario in many places in the states (specifically in California) is completely different, because you have to schedule a city inspection for each construction milestone (rought electrical, rough plumbing ing, sheetrock, stucco and so on) and each inspection could take 4-6 weeks before the inspector is available to come to the site (at least that is the case in the bay area). So basically the same project could take a year as far as the actual construction in the states, while in Spain (at least in Valencia area) the construction part would take half that time or less. For example. As we all know time is money, so that time saved translates into less interest paid to the lenders and more projects under your belt.
@Shital Thakkar This is a very broad topic to discuss, however in general the difference in language and regulations are topics to take into consideration. For buying a property in Spain you have to pay 10% of transfer tax for example. The after per month costs are then again way lower as in the US. Depends on where you invest specifically in the country but on average the prices are lower in Spain than what you are used to in the US. This makes that you can do more with your money here in Spain than in the US.
Also interesting to hear @Africa Estrada's opinion. She is from Valencia originally and lived for a long time in the US, before now deciding to come back to Valencia, Spain again. We are working together on some projects and she is saying that the biggest difference is the amount of opportunities in Spain still available & the mentality of the people towards real estate. The country is not that exploited in terms of real estate yet. It is not a big hype to be flipping houses in creative ways of financing, for example. This can bring advantages and disadvantages of course.
@Shital Thakkar@Ravi Kulkarni@Africa Estrada, the only point is that in Spain people are not always that strict to meet at a specific time as in other parts of the world. Best to double-check your appointment especially if you deal with local workers
@Erwin Groenendijk @Shital Thakkar@Africa Elansuga Great insights and market information. You have given me a few things to think about. One of the challenges I need to tackle, being in the US, is to find a trusted person that will manage my RE interests in Spain effectively. I should be able to make at least a couple of trips a year but for the most part, I will have to rely on this person on the ground. Are property management companies worth looking into? What percentage of revenue do they expect to provide their services - finding renters, taking care of repairs, etc.? Do you think it is worthwhile to go down that path from the cost perspective? Or if I were to go with an individual, would that be somebody like a lawyer or a real estate agent? Let me know what makes sense from your experience. I greatly appreciate your thoughts and guidance!
@Ravi Kulkarni I would be interested on talking further with you over the phone or via WhatsApp if that is okay with you, because I actually have lots of good info in regards to your latest quedtions but it may be a bit long to write all of it here :) I eill send you a separate message later on today.
@Erwin Groenendijk @Shital Thakkar@Africa Elansuga Great insights and market information. You have given me a few things to think about. One of the challenges I need to tackle, being in the US, is to find a trusted person that will manage my RE interests in Spain effectively. I should be able to make at least a couple of trips a year but for the most part, I will have to rely on this person on the ground. Are property management companies worth looking into? What percentage of revenue do they expect to provide their services - finding renters, taking care of repairs, etc.? Do you think it is worthwhile to go down that path from the cost perspective? Or if I were to go with an individual, would that be somebody like a lawyer or a real estate agent? Let me know what makes sense from your experience. I greatly appreciate your thoughts and guidance!
You're talking with the right people. We have been doing multiple projects in Barcelona and Valencia and figured all these points out. As we ourselves are located in Barcelona, we are teaming up with Africa who is based in Valencia for our latest project in which we are transforming a 300m2 garage space into three residential apartments. Africa will be our hands and feet on the ground, managing our contractor teams on a weekly/daily base. Next that she is a great person, she knows very well what she is doing finding her way in the Spanish market after having started real estate in the US.
Construction teams, agents, architects, lenders, project and city analysis, managing a project in Spain, and many more, feel free to reach out when also your plan is more concrete in terms of locations, type, etc.
@Johann Eriksen I will draft a concise summary then, so everyone can benefit from the info and then if any of you wants more details because you plan to take action and start investing in Spain , I will be happy to talk more about your specific situation, and give you my opinion based on what city in Spain you have in mind. As it can differ a bit basef on location too.
@Ravi Kulkarni I am curious- did you get to invest in a property in Spain? Or did this year shake things up a bit and that idea get put on hold? @Africa Elansuga I would love to connect with you as well, if possible-I'd like to start seriously discussing how I can invest in Spain with the next year
Hi guys, thanks for sharing your insights. The topic is a bit old, but maybe we can re activate it a bit! I am a small real estate investors for Vienna and I am looking to invest in Valencia ( I studied there and I do know quite well the language). I have some equity to invest, but none trustworthy on the ground... and none to discuss the drawbacks to invest in Spain. The project you mentioned... getting a bigger Appartment and transform it in several small once is the approach that I am normally using here in Vienna as well. If you are also interested, I would really appreciate to get in touch with you guys and discuss more in details about this topic.
@Andrea Manica we just finished the 300m2 garage project and now selling the last unit. The project makes sense and changing commercial spaces to residential ones creates margin, just keep in mind that these projects take longer than normal 'simple' apartment renovation. We have had quite some delays and hick-ups along the way as you can also see from the date of the earlier messages in this thread.
If your capital is secured for a longer time and there is no time pressure, go for it. If you have more time constraint or want to go faster, you could potentially consider buying a to be renovated residential apartment. Our residential projects in Valencia tend to be easier and faster.
Also keep in mind the distance and (if I understand correctly) that it will be your 1st time investing in Valencia. Considering partnering up with someone could be another option to deal with this.
Thank you for the valuable input on Spanish RE investment.
I am also looking to start RE investment in Spain, with a mind of Buy & Hold or Flipping, mostly on multifamily units, and I would be happy to connect with any of you on that market.
@Gregory Pradervand in Barcelona it would be harder to find these net yields or prices or properties of these amounts. The prices are normally quite high (starting from 200k-ish) which means more difficult to achieve yields like this. You could possibly try in the outskirts of Barcelona or surrounding cities like Badalona.
Your aim is fair though and we normally search with +/- the same KPI's.
Not sure about Malaga and Gran Canaria, perhaps somebody else can fill in this spot.
In Barcelona we would be able to help you with contractor contacts if you decide to move forward here.