Want to invest in Spanish real estate but don’t know which strategy is best for you? Here, we’ll explain the two main real estate investing strategies that can help you make the right decision as a beginner investor.
When investing in foreign real estate in Spain, there are different goals that you can achieve with different strategies. The most common goals investors seek are rapid capital appreciation and cash flow.
If you want to gain capital in a short time, the best strategy is “Flipping Houses”. In this strategy, you buy a property in Spain below the market price and then sell it at a higher price. The difference between the buying and selling price is your capital gain.
There are two different ways to achieve capital appreciation with the Flipping Houses strategy:
If you prefer a stable income over a longer period of time, the best strategy would be cash flow, buying to rent. It is important to note that after you buy the apartment, the operating costs should be less than the income you can get from it. Depending on where you buy a property in Spain, you can rent it out long, medium or short term. Some cities in Spain, such as Valencia, offer the possibility to change the rental strategy, as there are students, tourists, expats and locals to whom you can rent your apartment.
In our experience, short-term rental to tourists is the rental strategy that brings the highest profitability, but also greater risk and more operating costs. Renting to students or expats (between 6 months and a year) is a rental strategy that has a good return on investment and therefore lower risk than short-term rentals. The long-term leasing strategy (more than 1 year) offers the lowest risk, but also a lower return compared to the two previously mentioned rental strategies. However, if you opt for a long-term leasing strategy, you can better plan the income that you generate.
This is a long-term goal and will allow you to earn passive income for as long as you own your home. The more you invest in real estate and stick to that goal, the more your passive income will increase until you can live from it.
In general, real estate investment strategies are based on buying below market price and then earning a good return, either by selling or renting the Spanish property.
If you’d like to learn more about how these strategies work and which one is best for you, schedule a free consultation with us today. We look forward to getting to know you!