Investing in Spain

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Gulliver1

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Hi All,

I am considering investing in a property in Spain and am looking for advice from anyone who has gone through the process abroad.

Is it easy/hard, are there any significant hidden charges, are the Spaniards helpful when people from abroad are purchasing property from them, etc.?

Any advice/suggestions/past experiences would be greatly appreciated.

Thanks in advance!
 
I'd say the Spanish will take your arm off if you come offering to buy property there right now. The market is on the floor, there's very little activity going on in Spain -- a bit like here.
Having said that, if you hanker after a good holiday home, this is a great time to buy in Spain. I would advise you to pick out several properties that you feel suit your needs, and offer really low on all of them. From what I hear, lots of sellers are panicking and accepting very low offers on really nice properties.
The buying process is simple, and the lawyers are generally very good and have English speaking staff. The actual transaction is carried out by a Notary, who also collects the taxes on the sale. Take advice from other owners about the reliability of lawyers etc. Don't go down the route of using Irish lawyers, they typically sublet to Spanish law firms anyway, so cut out the middle man!
I would advise you not to buy in a new development at this time. Many of these are either unfinished and likely to remain so, or have a lot of unsold units in them with consequent issues around common costs etc. Buy only in established and mature developments where you can see what you are getting. As well as that, sellers of new developments can't afford to drop prices to the level of older units that might have been originally bought at small money.
 
I agree on one thing with Lollix on one point and disagree on another...the market is on the floor albeit it has bottomed out but, the activity is a lot more than "little"...The marketplace is being watched closely by bargain hunters from the UK, Sweden, Holland and Russia...The Irish have gone off the radar completely.
Use a local estate agents which actively try to seek bargains...The bigger boys still have ridiciously high prices because they still have extremely high overheads (even if they've gone bust and resurfaced again!)
I would advise the opposite re a new development as developer have completely slashed their prices and now offer the buyer the chance of 100% mortgages through subrogation....this isn't possible with resales as the banks only offer 60% of the lower of the PP or valuation to non-residents.
The majority of these developments are complete and are perfectly ok...I for one have sussed the market and found some tremendous deals.

Good luck!
 
After looking at Spain to invest I then decided to invest in Tenerife. The following are the reasons 1.Very little new builds for the past 6 years 2. Cheap flights all year Ryanair.3. All year sunshine 4. Tax free Island 5. Spanish goverment are putting hugh money into the Tenerife to develop tourism
 
Mickryan72 is right about there being great deals in Spain, but we'll have to disagree on our approach. There is some activity in the market, but it really is a tiny fraction of what went on in the busy days. I know of numerous agencies that are either closed or are down to a skeleton staff just to keep ticking over. I was in one such place a few weeks back and the owner was the only one still working there, and he was playing solitaire on the PC. It really is as bad as that, which is good news for buyers with money to spend.
While Mickryan72 may have had a different experience, I really would caution against buying in new developments at this time. You will get better deals (or, as a minimum, equally good deals) in the marketplace on established properties than are available from developers holding firesales. In addition, you can see what you are getting; you know the state of play vis a vis occupancy etc. There is noi worse nightmare than being one of a very few owners in a large complex, even if the construction of it is finished.
 
Thanks guys for the replies.

Now another question:

I would need to borrow approximately 90% of the purchase price of the property. How do I go about doing so? Do I go through a bank in Ireland or Spain?
 
For a resale, as I mentioned, 90% is impossible. Spanish banks work on the premise of taking the lower of either the P.P or the valuation...Across the board, the rate is 60%-70% although one bank will give 60% LTV (valuation) up to a maximum loan of €300k...So if your property is valued at €500k+ then you'll get a €300k loan...PP is irrelevant.


For a new development (fully completed, finished, ready to move into and NOT OFF PLAN etc), it is possible to get 100% finance as developers are just selling the remaining units for the mortgage amount due to the fact that they don't want to be left with the debt!

Not sure if Irish banks are that forthcoming in giving mortgages for Spanish property these days!! They can hardly give mortgages for whats here!!
 
If you need to borrow 90%, does your business case still stack up if you get no rentals for say 8 months (until April 2010) or 20 months (until April 2011)?

Can you sit it out that long and still pay the maintenance and mortgage and taxes?

We can argue about how fast the UK holiday maker/ Spanish consumer will come back, but it is certainly possible (if not probable) that it might take that long. UK Unemployment is likely to continue rising for the next 6 months even if the economy turns the corner soon or already has done so. Spanish unemployment is also massively high (19%) so I wouldn't count on rental income from them either in any of the cities.

see for example:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2CB8KFfL3tw

Not trying to put you off (I'm going in September just for a look see feet-on-the-ground tour), but be sure to do your own maths. There may be money to be made, but you'll almost certainly need deep pockets. I'm looking more over a 5 year (or even longer) timeframe and would be going for a cash purchase (which might be refinanced later when terms improve). My investments in property funds have done very well this year (+10% to +30% since Jan 1st 2009) which is probably better than any investment in real property I could have done in this period.
 
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