The steps to investing in Madrid property

Are you interested in investing in Madrid property but don’t know where to begin?

 

investing in Madrid

 

Investing in Madrid: 3 steps to get started

 

  1. Prepare your finances
  2. Establish your investment goal
  3. Know the market

We begin with the first and most important step:

 

1. Prepare your finances

 

We know!  It is tedious and no one likes dealing with paperwork and legal documents but it is very important. Fortunately, you have come to the right place. Our team at Madrid Estate will support you and help you assemble the proper documentation. This way, you can focus on the most enjoyable part of the process: seeing the properties!

 

Have you considered getting a Spanish mortgage?

 

Did you know that in Spain, foreigners can get mortgages for up to 50% of the property value? Additionally, the fees are relatively low compared to other countries. Given that Spain recently changed their mortgages laws to make them more favorable to consumers, makes this a viable option.

 

In June 2024, the European Central Bank (ECB) lowered European interest rates for the first time since 2019. The ECB believes that inflation in the Eurozone is under control. This is in strict opposition to the United States Federal Reserve, who does not believe inflation has been sufficiently reigned in to warrant an interest rate decrease.

 

 

What is the true cost of investing in Madrid real estate?

 

There are additional costs to investing in Madrid real estate that you might not be familiar with them. They are:

  • The Impuesto Bienes de Inmuebles tax (IBI), the equivalent of a council tax: This is 1.1% of the property value.
  • Transfer tax: This amounts to 6% of the property price, if you purchase a second hand property in Madrid.
  • Other taxes: we refer you to this article to learn more: Madrid real estate taxes.
  • Legal and notary fees.
  • Interest on mortgage (if applicable).
  • Home insurance.

 

In short, you can expect to add 10-11% in fees, in addition to your real estate investment.

 

2. Establish your investment goal

 

Clarity equals power. The more you know what you want, the faster and easier it will be to find your ideal property. We recommend asking yourself the following questions:

 

  • Do you have a strategy in mind? Do you want to achieve a specific return on your investment?
  • Do you want to invest in a specific neighborhood? What is this neighborhood? If you want to learn more about the neighborhoods in Madrid, we have a complete guide: Madrid Estates’s Guide to Neighborhoods in Madrid
  • Do you want to generate a passive investment return, or do you prefer to renovate and flip your apartment?
  • Do you know the best way to optimize your resources?

 

3. Educate yourself about Madrid real estate prices

 

investing in Madrid property

 

The first thing you need to do is familiarize yourself with the prices per square meter in the Madrid market.

 

Here are some basic price guidelines, as of May 2024:

 

9,000-12,000+ €/m2: You have many options! In this price range, you can buy in elegant Salamanca. However, there are not many bargains to be found in the more upscale neighborhoods. As of January, 2024, the average price for a square meter of real estate in Salamanca was 7,186€. However, in Recoletos the average price per square meter jumps to 12,184€ per square meter. Real estate in the northern part of Salamanca, called Castellana, has a median home price of 10,615€ per square meter. 

 

7,000-8,000 €/m2: In this price range, you can buy in neighborhoods such as Justicia, Chueca and other high quality neighborhoods that are increasingly becoming luxurious.

 

6,000-7,000 €/m2: This price range still allows you to purchase property in the Center of Madrid, but it will likely need to be renovated. You can also find properties in the cheaper parts of Chamberí in this price range.

 

4,000-6,000 €/m2: With this budget you can find a property in up and coming Tetuán. This is an excellent neighborhood for property investment, particularly if you are interested in investing in properties for medium or long term rentals. You can also find properties in the lesser known parts of Salamanca, such as Guindalera and Fuente de Berro.

 

Less than 4,000 €/m2: If this is your budget, you can find a property in the suburbs or in neighborhoods where prices have been slower to increase. For example, Usera or Villa de Vallecas.

 

Madrid Estate offers complete property services. We can help you with all steps of investing in Madrid, from finding the property, to renting it and managing it professionally. Arrange a FREE CONSULTATION TODAY with our Founder, Fabiana Greci, to learn how we can help you with all aspects of your investment.

Do you need help relocating to Madrid?

If so, arrange a FREE CONSULTATION to learn how we help people relocating to, and living in Madrid.

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