Investing in Marbella Property Does It Make Sense?

As the Costa del Sol property market continues its recovery, we are not only
seeing buyers in search of the perfect holiday home or permanent base in the
sun, but increasingly larger numbers of clients are now looking to the housing
market here with a pure investment focus.
Broadly speaking, other than those solely interested in purchasing a new home
for their own enjoyment, buyers can be placed into three main categories:

 

PART-LIFESTYLE/PART-RENTAL INVESTMENT

on the Costa del Sol. Many of these purchasers intend to use their second home
in the sun for vacations throughout the year, primarily to escape the colder
northern European climes, but hope to rent the property to holidaymakers during
the high-season summer months to capitalise on the investment potential
of their property.
This is a strategy that many of our clients use successfully, with most of them
able to pay all of their maintenance fees and bills for the whole year simply by
renting their properties for eight weeks during July and August.
How to do it: Most properties will rent successfully to holidaymakers in the
summer season if they are priced correctly. Make sure your property is nicely
furnished and decorated to a high standard, and that you are able to offer free
Wi-Fi, air-conditioning and satellite TV to your guests.
Watch out for: High monthly community fees can eat into your profits. You still
need to pay for these yourself, plus your electricity and water bills. Make sure
you take these into account when you are doing your sums.

 

PURE RENTAL INVESTMENT

Some clients choose to buy their property on the Costa del Sol with the sole
intention of capitalising on the year-round rental market, be it the short-term
holiday market or the long-term rental market where tenants sign up to a longer
contract, say for 11 months.
Both of these options can be lucrative, but you need to tread with care. Firstly,
being successful in the holiday rental market takes hard work and perseverance.
The same rules apply. Make sure your property is well-presented and offers
holiday-makers all the mod-cons.
Moreover, make sure your property is well-located for winter holiday rentals.
Many people make the mistake of buying on a golf course, thinking that golfers
will rent their properties in the winter season. This is not wholly true. Most
golfers will play three or four different courses during a week’s break, but the
last place they want to be in the evenings is stuck on a golf course! Generally
speaking, if you can walk to amenities, such as bars, shops and restaurants, then
your property will appeal to a broader client base.
For those purchasers seeking to attract a long-term rental client, the general rule
of thumb is that you can expect to receive a monthly rent which is equivalent
to the weekly rent you can expect from the same property in the high-season
when rented to holidaymakers.
How to do it: Speak to a reputable letting agent about how best to present
your property and research the existing market thoroughly to steal a march
on the competition.
Watch out for: Again, high monthly community fees can really have a negative
impact on yields, although long-term tenants pay their own utility bills.
Make sure your contract with them is water-tight to avoid problems with
sitting tenants.

 

OFF-PLAN SPECULATIVE INVESTMENT

This is an interesting one, and is only suggested for seasoned investors. A great
way of making money in a rising, in-demand market: clients reserve a property
on an off-plan development, ready in say two years time. They normally pay
around 30 per cent (plus IVA/VAT) of the purchase price as a deposit, and by
securing the best-located units at the most competitive price they can then
capitalise on price rises during the course of the construction.
For example, if you reserve a property priced at €200,000, and at completion
the property has risen in value by 20 per cent, the increase in price would
equate to €40,000, while the client has invested only 30 per cent plus IVA/VAT
(€72,600). If they can find a buyer for their property prior to completion, the
client can potentially make a very handsome return on their initial 30 per cent
investment without having to pay a penny more to the developer.
How to do it: Make sure you invest at the lowest price and secure the best
unit(s). These are the ones that will still be attractive when the project reaches
completion.
Watch out for: Make sure the paperwork allows you to re-assign the contract
prior to completion. Most developers don’t allow it or they charge a fee for doing
so. In the event of a worst-case scenario, make sure you have sufficient funds
to complete the transaction.

 

Some Suggestions

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Ideal for holiday rentals: Los Jardines de Don Carlos,
Elviria – walk to beach, shops, bars, restaurants. Twobedroom
apartments from around €200,000.

 

5

7

Ideal for holiday rentals: Los Jardines de Don Carlos,
Elviria – walk to beach, shops, bars, restaurants. Twobedroom
apartments from around €200,000.

 

Sean Woolley, our resident property expert, can be contacted at Cloud Nine Spain: Centro Comercial Guadalmina 4, Local 88, San Pedro de Alcántara;
Tel. (+34) 692 254 432; sean@cloudninespain.com; www.cloudninespain.com

 

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