Before we start let's get this clear. The reason we are encouraging people to buy property to rent out is to bring more rental properties onto the market and help to sort out the rental crisis in Valencia. This has been put into sharp focus in the last week with the news that the number of properties available to rent has gone down by over 40% this year alone and this is after falls in the last two years meaning that in some areas there are now up to 80% fewer available properties to rent than a few years ago pre-pandemic.
The knock-on effects of this are manifold but suffice to say price rises due to lack of supply, difficulties in finding suitable and affordable accommodation for locals, students and incomers and pressures on current tenants coming up to the end of their contracts are among them. So let's get started by looking at what's in demand and how you might be able to help out and get a return maybe in a more altruistic way.
In Demand Valencia Property
Let's look at what type of properties are in demand then. What type of properties are the best when you are looking to choose an investment property?
Anything and everything.
Some things are more popular of course but everything has a demand currently. The most typical requests are for two bedroom apartments in the city or places just outside the city with good connections to universities, workplaces and the city but three bedrooms are in demand too so that people have that extra office room or for visitors or for families looking for a bit more space.
Modernising Property to Rent Out
It's unlikely that you will find exactly what you want because if you want it then others want it too and if you're not quick it's gone. You can however find things that could be perfect but need some work. Modernisations are the way to go with this and because of the way Spanish property is built you are able to change spaces in a property to make them more liveable too. Knocking down a wall isn't usually a problem, always check with an architect or builder first, because walls don't tend to support weight. Therefore you can often open up spaces and change pokey rooms into more attractive open spaces.
Equally the price of places to modernise is often very good compared with ready to go already modernised places or new builds. You can buy a place to modernise and do the work for less than the cost of buying the ready to go place and as long as you are able to wait a few months for the finished product then you're good to go.
Take a look at our previous post about modernising Valencia Property here but add a little to those prices as material costs have risen considerably since then.
How to Find A Good Tenant
We have written whole articles in the past about this and the basics still ring true. Be a good landlord and eventually you don't even have to advertise. Your current tenants will be your best advocates. However for those of you who haven't read our tips head on over to the page and take a look. I'll be waiting here in the next paragraph when you get back.
Areas To Buy Rental Property
Literally anywhere is not quite the answer... nah, not really. It's close to that but not exact. The city guarantees you a rental of course but it might not give you the best return or even the best tenants. People move on more quickly in the city and if you are looking for long term rentals then you might find that you need to regularly find new tenants. Any tenant can leave a rental contract after six months without penalty, and this is a good thing, due to the new rental contracts in place in the last couple of years. Prior to that tenants were punished for leaving a contract early even when it was through no fault of their own; work placements, loss of work, family commitments etc...
The city is still a good option and the areas around the city are also good but bear in mind the following and it will be easier. Transport connections (Metro or bus), larger population of the town 15-30k rather than small villages, a good building near to facilities in the town such as supermarkets, shops, cafes etc... universities nearby and most importantly make the place attractive.
Downsides of Renting Out a Property
You may get a tenant that complains about everything even when there is nothing to complain about, you may have one who stops paying (you can sort this out with insurance prior to the tenancy starting) you have upkeep of the apartment to think about and wear and tear, and you might find that you are constantly on call. Renting out an apartment is not set and forget, you have responsibilities to your tenant and for your apartment.
It doesn't have to be a bad experience though. We have many of our clients who have rented out their property successfully for years to happy tenants and we have clients who have become tenants on arrival and have been very happy in their rental properties because we only rent good places from decent owners who we talk with beforehand to make sure they know their responsibilities and requirements.
Stepping Stone Rental Properties
Of course there is another option for those of you wanting to buy a rental property and that is the medium term rental market. It's an underserved market and it's what we set up Stepping Stone Rentals for. If you are thinking of buying a rental property then we give you both options, the long term rental or the medium term rental for which we have lots of enquiries from people who will be more than happy to set up a three month rental at your new property. Read more about Stepping Stone Rentals by clicking on the image below or the link.
Ownership and Altruism
Owning a property gives you a chance to help out with the rental crisis going on around the world and more specifically in Valencia at the moment. You could sit on a property until you get the maximum offer and charge the most in the market to desperate people. On the other hand, you can set the property up at a decent price which will give you a good return on your investment and get you a good, careful client and fewer problems. It might also make you happier to be helping out. Altruism would be to buy a place and rent it out for a basic minimum but being a bit more altruistic can make two parties happy, the tenants and yourself. It's always good to have a win-win situation.
Now some may say this is a dream situation and nobody is into being a charity. However, we have clients who have set a price under market values and had their choice of tenants and not once have they had a problem and the tenants stay longer as a result.
How To Start The Process of Buying
First you need to define what you want. What are your goals, long term rental, medium term rental, eventual capital appreciation, setting up a portfolio etc...? You can start the process by sending us a form from the article below, just click the image to read it and fill it in.
Once you have decided on your strategy and your budget then it's time to decide what to buy. First thing to remember is don't feel rushed. Stick to what you have decided is going to be your type of property and wait. It may be that there is nothing similar to what you want available at the moment. This could be because what you are looking for doesn't exist (But don't worry we'll let you know about that when you submit the form in the above article) It's more likely though that it's because supply is tight and there is nothing on the market suitable.
Your returns will depend on the price you pay and the rental you ask for of course. Where there is demand you will be able to rent out relatively easily and it may be that your returns are better outside the city than in because despite the fact that rental prices are lower, the purchase prices are also lower.
Which Areas Should You Target?
Currently we are recommending the following areas bearing in mind the criteria we talked about above.
- The city of Valencia of course, all areas as everything rents out. There are some streets and buildings we won't recommend but whole districts to avoid, no.
- The larger towns surrounding the city with great communications, Paterna, Torrente, Alboraya and Burjassot.
- The larger towns a bit further out but on the metro or local train lines; Silla, La Pobla de Vallbona, Betera, Godella, Moncada, Museros, Meliana, Picassent, Lliria, Paiporta, Picanya, Ribarroja.
- Smaller villages where prices are lower not necessarily on metro lines; Olocau, Naquera, Chiva, Cheste, Villamarchante
Prices and Returns
At the time of writing it's rare that you will be able to find (And buy) anything under 200k in Valencia for renting out. Most of the properties listed under that price are likely to be VPO meaning as a non resident you cannot buy them and even less rent them out. Read about why in this post. Outside the city then your options are better at lower prices, with the best being between 150-180k in certain areas and others the 100-150k mark.
Expect returns of around 6-7% on average but you can find better or worse options everywhere. Also it may depend on your strategy. If you want higher capital appreciation possibilities long term then it may be that your actual return may be around 4% rather than 6 or 7%. Remember that you will have to pay taxes on these returns so bear that in mind and make sure you know a tax lawyer or gestor to deliver your tax return annually. You will pay taxes from 19% to 24% on rental income depending on your status as Spanish tax resident, European Union citizen or being from outside the EU.
Whatever your strategy as regards buying a rental property in Valencia you can be sure that here at Valencia Property we can help you. We might even help you by telling you that what you want is not feasible so don't waste your time, we have done that to various people recently asking for property in Valencia under 100k for example. It exists but it's probably not appropriate for the type of rentals they want. Contact us to talk and also make sure to fill in the form above with your requirements and we will get back to you.
Property of the Week
An apartment that would be great for all of the reasons we have just mentioned. It might not be ideal for buying and living in if what you want are sweeping views of the Serengeti* as it's interior, but for renting out, no problems.
This is a bargain holiday apartment, in a great location to easily explore the city and beyond. Why the great price? Well, its interior (no traffic noise), and the kitchen and bathroom are a bit of an odd shape. But who among us isn’t? If we were to not consider anything or anyone just because they are a weird shape where would we be?
Some examples: - The Hemisferic, fish knives, Madonna’s face
It is 5 minutes walk from the riverbed, and 10 from the city centre. Its across the road of one of Valencia’s 2 star Michelen restaurants, and the tramline for the beach passes by 100 metres away. This connects with the airport line, so less than 40 minutes door-to-door to the airport by public transport.
Other things that have weird shapes: - Most of the attachments for beard trimmers, tardigrades, Donald Trump
3 bedrooms, air-conditioning, no renovation required, just redecorate whenever you have a chance, this is a ready-to-go holiday apartment, a perfect base close to the city centre.
Pretty much every sweet potato, the Fiat Multipla and Harvey Weinstein's penis
Ok, I’ll stop now. Some things best not to be reminded of every time you walk into the kitchen.
*Might not be available in Valencia
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