Investing in bricks and mortar is one of the most deeply rooted financial bets in our country, but the market is evolving and a new trend is becoming widespread: buy, renovate and sell in Spain.
Traditionally, real estate properties have been considered safe securities, which provide a monthly return through rent, and which, over time, can be sold at a premium to recover the investment. Despite real estate bubbles, crises and pandemics, which have shaken the real estate market, this perception still exists. However, an operation that seeks to maximise profit is increasingly gaining momentum: buy, renovate and sell.
In this blog we unravel the keys to the practice that is taking real estate investment in Spain to another level. In addition, we will share with you some tips on how to generate the greatest profit from the minimum investment. Are you interested? Keep reading!
We are currently immersed in a period of uncertainty, dominated by rising inflation, soaring energy prices and rising interest rates. Given this situation, you are probably wondering whether it is the best time to embark on a real estate adventure. Experts agree that in a context such as the current one, it is best to invest in real assets, which protect savings against the loss of purchasing power due to inflation and are not volatile.
A report presented by the National Association of Ceramic and Construction Material Distributors in Spain (ANDIMAC) reveals that well-done renovations increase the value of houses by up to 20%. Furthermore, for an already refurbished property, up to 30% more rent can be obtained. And, it also points out that 70% of newly acquired houses undergo, before or after, maintenance and improvement works.
Although the estimate is 20%, the final percentage of revaluation will depend on three factors: the purchase price, the cost of the refurbishment and the final sale price.
An affordable purchase, an economical renovation and a sale above the acquisition cost: this is the recipe for success in making a profit from this business. However, it is not as simple as it may seem.
To embark on this adventure, it is important that you carefully analyse the market and find a really attractive opportunity: with a low price, a good location and features that meet buyers' demands.
And to find the ‘perfect property’, you will have to take into account a multitude of variables and make a lot of calculations. Focusing on a ‘trendy’ neighbourhood will increase the chances of a sale, but it will also increase the average property value. At the same time, the worse the initial state of the property, the lower the amount you will have to pay, but the more expensive the renovation will be.
According to a survey carried out by the General Council of Technical Architecture of Spain (CGATE), among the elements that Spaniards value most are the price, the location and the state of conservation of the building. In addition, we cannot forget the effect that the pandemic has had on the priorities of buyers, who are now looking for homes that are brighter and have some outdoor space, such as a terrace or patio. The winning option will be the home that brings all these elements together and does not exceed your initial budget.
Once you have found it, it's time to renovate to sell. So that you can decide how much to invest in it, it is advisable that you examine the amounts of other properties in the area, comparing those that have been refurbished and those that have not. The renovation budget should not be more than 50% of the difference.
Ask for quotes from several renovation companies and to avoid unpleasant surprises, choose one that guarantees a fixed price, a specific deadline for completion of the work and a guarantee of at least two years.
After the purchase and renovation, the moment of truth arrives: the sale. There is no magic formula to compete with the rest of the properties on the market and obtain the highest possible profit, but home staging can help you achieve this.
Of course, you can try to sell the flat absolutely empty, but experts say that a house in Spain with furniture sells faster. The explanation is simple: people's spatial vision requires points of reference, without them spaces seem smaller to us and we find it more difficult to imagine them inhabited. So the ideal is to make a ‘staging’ that shows potential buyers what it would be like to live in that home.
With this scenario already prepared, all you have to do is find a real estate expert who will guide you and accompany you throughout the sale process. All that remains is to find the buyer.
