Investing in property: everything you need to know

When people are looking to invest, one of the questions that most concern Spanish investors has to do with the property industry. Is investing in property really a profitable option nowadays? The answer is still yes: investing in property is profitable. Below we’ve got a rundown of everything you need to know when it comes to investing in property.

Is investing in property profitable?

The answer is yes; investing in property is profitable. The property industry is one of the most robust industries, with no shortage of significant advantages. Spaniards are increasingly placing their trust in property investment, so the upward trend is no surprise, strengthening security and certainty in these types of investments.

What types of property investment are there?

There’s no need to buy expensive property to turn a profit. With the right strategy, any property could be a source of extra income. Even if you’re starting out with limited capital, there are attractive options to take your first steps in the world of property investments. Keep reading for different ways to invest in property.

Crowdfunding investment in property

Crowdfunding, the collective financing of projects or assets, is an innovative way to invest in property. This is all done online and has undergone remarkable growth in a traditionally technology-averse industry.

It offers advantages for investors and developers alike, with a wide range of secure and transparent projects available to investors and best of all, no prior experience is required. Diversifying the investment across several projects significantly reduces risk and returns are obtained in shorter time frames. What’s more, for developers, it’s a different financing option without having to be completely dependent on banks.

Buying properties to rent

Investing in buy-to-lets is one of the most traditional forms of investment, which often involves obtaining financing through a mortgage. You can invest in apartments, garages, storage spaces or houses in order to generate rental income.

However, you need to draw up the right strategies to see the best returns. You should meticulously look into the most suitable types of property, as houses and apartments are often more profitable, but also come with higher costs. Garages and storage spaces, while generating a lower annual rent, can be more cost efficient. Before renting, you need to calculate the rent needed to cover expenses such as mortgage and utilities.

Buying properties to renovate and sell

As well as renting, you might want to consider buying properties that need renovating, which can often cost less. Then, after it has been renovated, you can put the property back on the market and turn a profit. However, this strategy requires a thorough analysis, including the location, services and what the property is to be used for. You should analyse why the property was devalued and make sure that the renovation costs do not exceed how much you intend to make from the sale.

Investing in holiday rentals

The holiday rental market is attractive to property owners in popular destinations. You can rent your property to short-term tourists, making the most of this rising trend. Nevertheless, this strategy requires a meticulous understanding of the market and what attracts tourists in the region you’re investing in. Ongoing management and attention to detail are key.

Investing in commercial properties

Investing in commercial property, such as offices, buildings, commercial premises and industrial buildings, can generate considerable income, but often calls for a much higher initial investment. This option would be more suited to those with significant resources or companies. Before investing, thoroughly analyse the location and the target market of the property.

Passive property investments

If you don’t want to buy property outright, you could also look into passive property investment, putting your investments in the hands of experienced professionals. This long-term strategy entails putting your trust in experts to ensure solid investment opportunities and sustainable returns over time.

What are the advantages of investing in properties?

Investing in properties is an attractive financial strategy that comes with no shortage of advantages; from solid returns to multiple rental options and the ability to use financial leverage. Below we’ve got a rundown of some of the biggest advantages.

Attractive yield

If you’re wondering “Is investing in property profitable?”, note that rental yields tend to be considerably higher, typically ranging from 2% to 15%, compared to returns on fixed-income investments. This, of course, comes down to the investment being made in the right way while bearing in mind the related costs.

Range of rental options

Another attractive aspect of investing in property is that there’s no shortage of rental options, meaning you can go for the option that best suits your needs.

Using leverage in investing

Leverage is an extremely attractive advantage. It entails acquiring the asset through a bank loan and financing the instalments with rental income. By doing this, you can partially or completely self-finance the purchase without having to use your own savings.

Tips on investing in properties

When investing in property, always keep these two tips mind:

• Success comes right when the property is acquired. Contrary to popular belief, successful investments are forged when the purchase is made. The reason for this is rather clear. When we invest, we know exactly how much we’re paying so we can compare it with the average market price. On the other hand, future market conditions are purely hypothetical and out of our hands.
• Look for good sellers. It’s of the utmost importance to not just look for high-quality properties: you also need to seek out committed owners. Committed owners are people with a genuine interest in selling their property, whether for financial needs, desire to lighten the management burden or due to onerous repairs, to name but a few.

Where are the best places in Spain to invest in property?

The correlation between the acquisition cost and the rent paid makes coastal areas the best places to invest in property. Therefore, the coast in Castellón, the warm coast in the region of Murcia, the coast of Valencia and the coast of Almería stand out as the regions with the most attractive yields, ranging from 8% to 7.2%.

To sum up, if you’re wondering whether it’s a good idea to invest in property, you’ll be happy to know that investing in property in Spain is a good option. It offers an attractive yield, with a wide range of options, including crowdfunding and holiday lets. What’s more, remember that leverage is beneficial; however, the key lies in buying at the right time.