Buying Off Plan  

• Many people have heard about the phenomenon of buying property in Spain off-plan. All that this means is that you are securing the most favourable prices and terms by buying something that has not been built yet.
• Demand for Spanish property has meant that most buyers end up having to wait for completion of their ideal property. Developers will normally increase the prices of their units at certain stages of construction, and most notably once a show home is erected. It has not been uncommon for some developers to increase prices by 10% if their weekly sales targets have been reached! When reserving property off-plan, you have a number of options open to you - the beauty is that, unlike most investment products, you have between 18 months and 2 years (construction time) to decide which option to take. This allows the investment to track and reflect your own particular life needs, desires and changes. Normally, developers will ask for a sum of money of between 25% - 50% of the purchase price, within 1 month of reserving a property. Usually, there is then nothing more to pay before completion in, say, 2 years time.

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Option 1 - Keep and Rent

• Many investors decide to retain their property in Spain for their own personal use. Many also decide not to rent the property - some fall in love with the place and would rather other people did not enjoy it too! However, if you choose to rent the property, you should be aiming to cover the cost of bills, maintenance, mortgage costs, and be left with sufficient surplus to enjoy a couple of visits to your property in Spain each year.
• A realistic rental return of some 14 weeks in your first year is achievable, assuming you rent during high season periods. This should generate around 12000 to 15000 euros income on an average 2 bed 2 bathroom apartment in a good location. You would expect to see this income increase over the subsequent years.
• We always advise a mixed approach to marketing a rental investment. Very often the most receptive audience of potential clients will be those closest to you, family, friends and business associates. It is amazing how word spreads after someone has had a great holiday in a wonderful property! Remember that the rental season in Southern Spain is now all year round. Once the summer season is complete, there is an influx of golfers from all over Europe from September to May, to play Southern Spain’s beautiful courses. 

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Option 2 - Sell Before Completion

• There are 2 distinct sets of buyers in the market - the speculative investors who will snap up the best units on the best developments at the lowest prices, before selling on their option to purchase to the lifestyle investor who would prefer to complete and occupy the property for personal use and perhaps earn some rental income.

• Some of our clients have seen returns of 40% - 70% on an initial investment of as little as £40,000, just by securing a well located off-plan property and selling it before completion.Nearly all of the costs payable at completion are avoided in this scenario. Care needs to be taken when investing speculatively in Spanish property. There are never any guarantees that a property will be sold prior to completion. It is imperative to discuss this type of purchase fully with us to ensure the best chance of success.

• As a footnote, we often find that our speculative investors become lifestyle buyers, falling in love with their chosen Spanish properties, and deciding to keep hold of them. We also find that our lifestyle buyers are often attracted by the potentially rewarding returns enjoyed by the speculative investor. The options are open to everyone.