@Juan Pardo wow it looks like we could have been neighbors! I grew up in Las Canteras and know the city well.
The property I was closest on buying was in La Isleta. I concur this is were there may still be opportunity, albeit it’s slim pickings. The AirBnB boom has shot prices up beyond reason, and it seemed to me the market is now fairly stagnant. Btw your insights around obtaining property leads and financing were very insightful, many thanks. I am curious if something like seller financing is or can be done in Spain at all.
It’s interesting to me that I was faced with similar questions you have about the US when I looking at apartments in Spain. I wasn’t 100% clear how taxes worked, la comunidad, or property liens and title (as I found out there’s no such thing as title insurance). So I fully appreciate where you’re coming from.
The operating costs in the US for the typical property is often referred to as PITIA, as in the loan Principal repayment, loan Interest, property Taxes, property Insurance and sometimes Association fees. On top of that you then have maintenance and the more discretionary items like property management commissions, mortgage insurance, capex, etc. This cost structure probably applies to the vast majority of residential properties in the US.
Diving into the more bespoke ones, the “TIA”. Taxes are based on state/county/city laws, sometimes all three stacked up, and you can find them all fairly easily and accurately online. A note aside I find red states (republican) not only tend to have lower property taxes but also more landlord friendly laws. In terms of escalation over time in my experience taxes can actually grow above appreciation, and while it can definitely sting, choosing the right market can be a natural hedge of sorts. One of my properties in Colorado went from $600 to $1k p.a. in taxes in just three years... a 20% average annual increase. I just had it appraised as part of refinancing and it’s value is up a good $70k over same period...
Rental insurance can vary quite drastically, on my rentals it ranges from $400 to $1k p.a. based on state laws, house specs and coverage. It’s of course important to have (mandatory if you have a loan) to protect against severe damage and liability.
Then there's association fees, also HOA or condo fees. While SFHs often times have no HOA, townhomes (adosados) usually will. Practically speaking a basic HOA for SFHs and THs provides maintenance of common areas (landscaping, snow removal, maybe trash removal) and a master insurance that sometimes covers the exterior of the building. Hail storms are common in Colorado and damage can be nasty. HOA can achieve significant economies of scale with a master policy. In terms of cost say a basic HOA can run up to a couple hundred a month. Another whole level up is condominiums, large apartment buildings and gated communities - all of which can show as HOA fee as well. I've seen these fees hit $1k+ a month, which can be convenient if you have a boat to dock or want squash courts and a state of the art gym in your building. Investment wise I almost always struggle to make the numbers work on these. Even if rents are high enough only a low purchase price might mitigate the costly vacancy risk.
So the apartments you've seen will be priced to account for steep monthly fees, which go to pay for the doorman, pool maintenance, security, usually some but not all utilities, etc. I remember being fascinated by a loft-style 3 bedroom apartment in a busy, historic downtown area, with floor to ceiling windows and fully renovated inside, priced at a salivating $220k. After spending too much time contacting agents I came to find about the $700/mo HOA. Thankfully Zillow and the others are getting better are publishing these up front. For some reason Redfin seems for be slightly better at it.
In terms of finding deals I find Zillow, Redfin, Trulia to be great tools. I probably peek in a few times a week, mostly leisurely. But sometimes I come across good leads. Most of the data in all these platforms is based off the MLS database, a centralized nationwide paid service that realtors access to list, buy, sell real estate. The biggest limitation is of course that what you see for free everyone else sees, so good deals go fast. But it has a record of every property ever listed on it, which is effectively every one sold or bought by a licensed agent. The prices you see from recent sales comes from the MLS, which is used by these websites to estimate house values using past sales and comps. Just note they also aggregate information from other sources so sometimes you see weird sales data.
There are of course many other options to find leads, none of which I have any experience with. The amount of publicly available information on most US properties is truly staggering. You can read in BP from full time and hardcore investors about their many techniques, like “driving for dollars”, mailing campaigns, cold calling, etc.
Then you have auctions of various kinds, which I’d say require special skills (and usually all cash payments with no contingencies). A google search will bring up the big auction websites.
And more and more there are also sites popping up dedicated to brokering REI, offering data services or even cash flowing rentals not seen in MLS -probably at a slight premium.
Here are a few examples I could find in my recent browser history:
tranzon.com
roofstock.com
loopnet.com
propertyradar.com
Apologies for the long post, probably not great forum etiquette so hopefully helpful to others as well!
Saludos,
Dani.-
