Buying property in Spain can be a great investment, but it also comes with challenges. Many foreign home buyers run into problems because they don’t fully understand the process. Here are some ways to avoid the common mistakes!
Research the market
Not all areas in Spain are the same when it comes to property investment. Some places, like Madrid and Barcelona, are popular, but other locations may offer better deals. Valencia, for example, is becoming a top choice due to its affordable property prices and high quality of life.
How to avoid mistakes: Research different cities and neighborhoods. Look at property prices, rental demand, and future growth potential. Speak to local experts for advice. My Blue Bricks specializes in helping investors find the best deals in Valencia, offering insights into up-and-coming neighborhoods.
In our upcoming FREE webinar: how to choose the best city to invest in. You get key characteristics, markets can be evaluated easily to see if they fit with your strategy. We will present our blueprint that makes it possible to scan a market in just a couple of minutes. Click here to get some more information.
Understand the Spanish law
Spain has its own set of property laws, and they can be confusing for foreigners, as they can be very different from other European countries. Some investors buy properties without checking if they follow all legal requirements. In Valencia, for example, short-term rental licenses, called touristic licenses, are required in many areas, and some buildings do not allow tourist rentals.
How to avoid mistakes: Do research! Hire a Spanish real estate lawyer to help you through the legal process. This will ensure everything is done correctly and you don’t face problems later. Some real estate companies already work with legal experts to ensure all their properties meet local requirements.
Extra costs
Some investors focus only on the price of the property and forget about other costs like taxes, legal fees, and maintenance expenses. In Valencia, property purchase taxes can be around 10% of the price, and additional costs like notary fees and registration fees add up.
How to avoid mistakes: Be prepared for additional costs. These can add up to 10–15% of the property price. Also, remember that owning a property comes with yearly taxes and maintenance fees. You can use the My Blue bricks investor calculator to analyze potential deals in minutes, making it easier to make informed decisions about your potential buy-to-let investments. Click here for the FREE download. (Please fill in the form and you will get the calculator directly)
Look into the type of property
Some investors buy properties that don’t match their goals. For example, a property might be great for long-term renting but not for short-term renting. In Valencia, certain neighborhoods like Ruzafa and El Cabanyal are popular for Airbnb rentals, but regulations are changing.
How to avoid mistakes: Decide what you want from your investment before buying. If you’re thinking about short-term rentals, make sure the property has a touristic license or check local rules to see if they allow you to get one for the property. Our company can guide you in choosing the right type of property based on your investment goals.
Struggling to get a mortgage
Getting a mortgage in Spain can be tricky for foreigners. Spanish banks often have stricter rules for non-residents, making it harder to get approved. Banks in Spain consider foreign buyers to be higher risk. Non-residents may need to pay a larger down payment and face stricter conditions, like proving income and creditworthiness.
How to avoid mistakes: Look at different financing options early on. Some international banks offer loans for foreign investors, or you might need to get a loan in your home country.
Know about Spanish taxes
If you buy property in Spain, you’ll have to pay taxes. This includes taxes when buying, renting, and selling the property. For example, non-resident landlords in Spain pay a rental income tax of 19% (for EU residents) or 24% (for non-EU residents).
How to avoid mistakes: Learn about Spain’s tax system before purchasing a property. Consult with a local tax advisor to understand income tax, property tax, and capital gains tax. Many real estate agencies, including My Blue Bricks, offer connections to tax professionals who can guide you through the process.
Conclusion
Investing in Spain can be very rewarding, but you need to be careful. By doing good research, working with experts, and planning ahead, you can avoid problems and make the most of your investment. My Blue Bricks specializes in helping foreign investors navigate the Valencia property market, ensuring they make smart, profitable decisions. Read the book Investing in the Spanish Sun to grow your real estate knowledge. This way you’ll be well-prepared to make smart investment choices and take advantage of opportunities in the growing Spanish property market to reach your goals.
Take a look at our FREE downloadable investor calculator! Click here.
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