Have you fallen in love with an apartment but you’re not sure if it is a good investment? Many times we find a space with ideal architecture, layout and design but it isn’t aligned with our business plan. To keep this from happening to you, here are five tips for successfully buying a property in Madrid.
1. Evaluate the area and see how much renovating the property would increase its value
Consider buying a property that needs renovating. Did you know that each 1€ spent on renovating a property in Madrid increases its value by 1.5€?
2. Buy with an objective in mind
It is important to always keep in mind the factors that make an apartment attractive to renters
When buying a home to rent, we must be practical and think about what will bear fruit from the beginning. It’s important to like what you buy, but it doesn’t need to be the apartment of your dreams because you will not be living there. Rather, the neighborhood and floor plan must be optimized for business. You should also consider whether your want to rent it short, medium or long term as this will be a key variable when you choose your neighborhood and layout.
If you want to rent the property short term, we advise investing in tourist friendly neighborhoods in the Center, Chueca or even Chamberí. If you want to rent it medium or long term, Chamberí and Salamanca are excellent choices. If your target client is a business person, the neighborhood of Chamartin is your best bet, as this is the location of Madrid’s Central Business District.
3. Always add an additional 10% to the property’s value to budget for closing costs
You have to take into account the additional costs associated with buying property in Madrid: taxes, notary fees, legal fees, accountancy fees and registering the property with the Land Registry.
Focus on the things about a property that you can’t change. Not every property can get an Airbnb license- there are certain minimum standards that must be met to get a touristic license. That said, in Madrid they are not strongly enforcing the criteria like the Barcelona authorities are doing.
Ceiling height, luminosity and the number of windows are all key factors on the rental market. Essentially, you want some distinguishing feature(s) that make the apartment “pop” amongst all the other AirBnb listings in your neighborhood.
4. Don’t lose a good opportunity because you negotiate too much
If you find a property in Madrid that checks off most of the boxes on your list, don’t look much further. Sometimes we are so concerned about getting a good deal that we let the perfect property slip through our fingers. If you find the perfect property in Madrid, our tip is to buy it and don’t fixate on negotiating the perfect deal. Good properties with ideal characteristics “fly off the shelves.” The maximum you can negotiate on properties like this is 3%.
5. Get your documentation in order before you begin your property search
We always advise our clients to start their property searches by getting their paperwork in order. You need to find a Spanish bank that will pre-qualify you for a mortgage so you know exactly how much money you have to work with. Spanish banks can be slow, so you need to work with a bank that can close the deal. NOTE: If getting a Golden Visa is important to you, keep in mind that any money lent to you by Spanish banks does not count towards the 500,000€ threshold. Nor does money invested in renovation. It all has to be in the property value, which will be documented by the notary and land registry.
