The refrain we are constantly repeating on every call we receive asking us whether we have anything to rent is as follows:
“I’m sorry, we haven’t got anything”
Every day we receive calls, Whatsapps and mail asking us whether there are any flats for rental and we haven’t got anything. Now and again we get an apartment for rental and we are renting it out in days without a problem. As a potential Valencia Property buyer looking to acquire a property for rental this is good news of course as you have a large pool of potential tenants looking to move into your apartments.
Over the last few months we have seen plenty of investors looking to get into the Valencia Property market and rent out properties to people but they are doing one thing wrong, they are only looking in the city of Valencia. Outside the city they do not realise that there is huge demand and prices of course are lower meaning the returns are potentially higher. In my town of La Pobla de Vallbona I get around ten to fifteen calls per week asking me for rental apartments and we never have anything available.
The issue is now being exacerbated by a greater fuel for demand which is the disastrous situation of the War in Ukraine. Families are being forced to move and many are finding themselves in Valencia and Spain as a whole where they are looking to either stay in family homes using a spare room or looking for their own rental (If you have a spare room let us know as we are working with lots of refugee families looking for a solution for a few months). The problems they are having are the same as everybody else that is ringing us daily in that there are very few rentals available anywhere.
Why Is This The Case?
Traditionally Spanish owners of apartments and properties for rent only want long term tenants (For a year or more) and they want those tenants to be reliable. In order to prove their reliability they require details which are then passed onto an insurance company who will then check out the potential tenant and give the go ahead or not.
People coming in from other countries whether as digital nomads, people looking to relocate to Valencia or refugees cannot be insured against non payment because the insurance company has no records of them to check their criteria against. What this means that even high net worth individuals from abroad find it difficult to get a rental without perhaps paying a fortune up front or putting down a ridiculous amount in deposit. We avoid this issue for most of our rental clients with our rental service which you can read about here.
However, our rental service requires a payment to us and also the agency offering the property. We do the leg work to narrow down the search and also get an agreement prior to rental that the client will be accepted by the owner despite coming from outside Spain. This week virtually every owner and agent we have spoken to has wanted to be able to take out insurance eliminating many potential tenants. We have spent most of the week of Fallas in Valencia trying to help refugees in their search for rentals and unfortunately except in a few cases we have been mostly unsuccessful.
We’d like to help more and that’s where our investor clients come in.
What You Can Do?
As a potential buyer of Valencia Property if you are interested in investment for rental purposes there are various things you can do to maximise your return and also help people to find a good place to live.
- Buy a property outside of the city at a good price.
- Accept applications for rental from non-resident families as well as Spanish resident families and go without tenant insurance.
- Make the place comfortable with normal quality furnishings and everything working.
There is little that goes wrong with a Spanish apartment so property insurance is cheap and the fixed costs of having an apartment are also cheap. With the demand from people looking to rent currently you will have a queue of potential tenants allowing you to make the decision as to how to rent the property out, to families, to students, to foreigners or to refugees. Anecdotally (and in private messages from our clients) we have heard of many people offering their rooms and properties for free to refugee families with children. Offering a solution for a few months like this would be wonderful and make you a feel like you are doing something positive to help out in the situation of course.
What Will Your Return Be?
Typically the percentage return that our clients are getting on their properties for rental outside the city is over 5.5% with outstanding cases of 12% for example (The worst case scenario is paying 4% roughly but the rental was done as a favour to a friend so the owner isn’t too worried as the capital value of the property is also rising). You could buy a property and let it out temporarily to refugee families and do the world a favour, most Ukrainians we have been working with this week really want to return as soon as possible to their homes and once they are able to leave then you can rent out to others looking for longer term places to live.
Buying a rental apartment outside the city for under 100k is the sweet spot for potential property investors as they will get a minimum of 500 Euros per month return on an apartment long term in most of the satellite towns around Valencia. Equally, if you buy a property with features such as a terrace, the property being more modern, lifts, shared pool or facilities, then the returns might well be higher and if you buy well then your percentage return can be excellent.
With prices also rising currently there is also the potential for future capital apprecaition of the properties just like in the above example and as demand grows due to demographic changes then there will be a continued demand for good quality property for rental in these areas. (My town of La Pobla has grown 100% in population size since I moved here over 20 years ago) In La Pobla currently there are over 25000 people and currently there is not a single three bedroom apartment for rent under 600 Euros. The cheapest house is 1300 Euros per month (There is another at 800 Euros but owner doesn’t respond to messages and the advert hasn’t been updated for months). In Betera there is one property for rent under 600 Euros for a town of 25000 people and the cheapest house is 1250 Euros. In Ribarroja there are 3 properties under 600 Euros for a population of 22000 and the cheapest house is 1100 Euros. You get the idea.
Towns Where Rental Property Is In Demand
The satellite towns around Valencia are all in demand but especially the ones which are well connected by public transport to the city. The previously mentioned La Pobla de Vallbona, Betera, Paterna, Burjassot, Torrente and the area to the north of the city in the Horta Nord are popular due to their links via train and metro as well as bus services. Equally you can find great places in Naquera, Serra, Cheste, Lliria, Ribarroja, Villamarchante and others slightly further out where property is affordable yet demand for rental continues to be high.
Obviously this is also the case for Valencia but you may have to pay double for your rental property in Valencia and your return might not be double. Having two properties in a village or town to rent out will usually give a better return than a single property in the city and when a tenant moves out or moves on you still have income from the second property.
To this end we have now put together a database of properties that we have identified as great rental investments. We will be updatng it as other properties come in and places get sold. We have already sent it out to our qualified investors and they are actively looking to take on some of these properties to be able to rent them out immediately (or after doing the required work on them and getting together the furniture pack). Obviously we can help out with getting it ready for rental and also any renovation that needs doing.
Property of the Week
As we are talking about rental properties in towns and villages around Valencia it makes logial sense this week to feature something that could work as an example. This apartment in Naquera at 70,000 Euros would give an excellent return.
“Valencia City and surrounding area has taken off in popularity recently. But there are still some real bargains to be had if you know where to look. But like a Bring-your-own party in a Downing Street garden, these won’t stay secret forever so listen up.
This apartment is right in the town of Naquera – one of our favorites – 25kms from Valencia and fewer to the beach. It is large, over 110m2 and has 4 bedrooms, or 3 bedrooms and an office perhaps (being in a large town high-speed internet is no problem).
There is a community pool and 2 balconies with amazing views of the nearby countryside. There’s even a parking space included. When you look at the price you have to agree this is amazing value.
You just have to know where to look. Fortunately for you we do. Get in touch with us if you want to know more”
Fallas Week Holidays and Rain
The Fallas week was a bit of a damp squib due to the weather and the next week looks to be even worse, 10 days of rain coming up! However, we didn’t realise how bad the weather actually was. Take a look at this graphic about the hours of sunshine during the five days of Fallas this year. The average is 40 hours of sun and this year we had… 90 minutes over 5 days! The worst weather since records began.
As we always say though, here in Valencia when it rains we aren’t too annoyed as we know that very soon we will be walking around in T-Shirts keeping out of the sun as the endless summer days roll on in.
From today, Monday the 21st of March, we are back working and we are back with a bang as all of us are booked up with clients this week. If you are thinking of coming to visit in the next few weeks then get in touch well in advance and arrange your visits with us as once we are booked up we can’t deal with more people without compromising on our quality service and we aren’t going to do that.
Coming Up on the Valencia Property Blog
Next week we are talking about potentially the end of the Golden Visa programme. In future weeks we will be looking at the perspectives for the summer of 2022, meet the Valencia Property team and more from our podcasts.
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