The profitability of an asset depends on making the right decisions at the time of acquiring it. It is very common and very likely that we make mistakes. Investing in Madrid requires taking some decisions.
Investing in Madrid
The residential real estate sector in Madrid has registered a sustained and progressive recovery that has allowed it to, once again, appear as an attractive real estate option for native and foreign buyers.
We have gone through the 2008 and, more recently, the COVID crisis, and in both cases, prices suffered but also recovered; in the first crisis, they recovered in the big cities.
1. Define the objective of the investment
Determining the use that will be given to the dwelling is the first step.
Whether it will be established as a primary or secondary residence, if it will be put up for sale shortly after it has been acquired, or if it is intended to generate profitability through rental
In this second case, it is necessary to define what type of client is desired: students, embassies, expatriates, residents, etc.
Obviously, from this point, the rest of the corresponding decisions can be made, such as the area where the property will be located, its size, whether it should be renovated, and, of course, the amount to invest.
2. To renovate or not to renovate
The structural and aesthetic repairs carried out on the property imply additional expenses, which are not always contemplated in the initial investment amount, so it will depend on each particular case whether to proceed with these or not.
Although renovations that have been carried out in a house do not represent a decisive factor for many clients, it is important to mention that the renovations increase the sale price and the rental price of a house.
We recommend investing in properties to be renovated in Madrid.
3. Free up cash flow
Due to the attractive conditions offered by the real estate sector in Madrid, if you want to invest in Madrid, you should know that the available assets do not usually remain on the market for a long time, so you should be prepared to take advantage of the best investment opportunities.
There is also the possibility of requesting financing for a real estate investment through a bank.
Banks usually grant 80% of the purchase value; added to this, you need an extra 10% of purchase expenses and the value of the renovation, which you can estimate at over €800, to make a prior budget. Knowing something about taxes and the buying process will help you budget.
4. Decide if the residence visa is an objective
In this case, it should be taken into account that the Spanish State can grant this type of permit to non-resident foreign buyers who make a high investment, provided that other additional requirements are met, which you have in detail in an informative article on the Golden Visa.
Many people decide to invest in Madrid only because of that reason.
In consequence, it is recommended to hire a specialist in local legislation and immigration matters who can provide advice and supervise the process of applying for residence for real estate investment, and in this regard, we have the collaboration of the international law firm ECIJA.
5. Set desired profitability criteria
It is very important to keep in mind that the assets that generate the most profit are the modest apartments located in central streets or avenues that have not been renovated, instead of those that are located in more exclusive areas and that do not need additional arrangements.
We have the operating profit and the profit per sale.
You should tell your agent which one you expect from each to see if it’s viable.
Bargains and miracles do not exist, so you must provide realistic information so that the real estate operation is feasible.
6. Hire a real estate investment expert
Having the services of a specialized team in the real estate sector in Madrid is a key factor in setting up the investment process in the most optimal and reliable way, minimizing risks and maximizing profitability.
To conclude, we recommend people we trust; we have bought and sold and carried out some small promotions, and we have people who have helped us. In this matter, we recommend:
Leon Taurel (Alimbles) is an engineer, personal shopper, renovator, and decorator. An all-in-one that has made some of our houses
León works for families and investors, mainly from Miami and Latin America.
He has specialized in carrying out the entire cycle, delivering the turnkey asset with everything finished to be put into operation.
Alimbles (Leon Taurel) is more used to working with Latin American investors, even making purchases on his behalf after a validation process.
Francisco Hernandez (Tailoy&Key). He is one of the partners and directors of the real estate agency that is most dedicated to serving Spanish investors.
It is located near the Plaza del Marques de Salamanca.
They are active in high-end and small buildings and premises.
They have a team of architects who carry out the transformation of the assets. Tailor&key (Francisco Hernández) offers wide coverage in Madrid.
It is a personal decision: attention and perfection versus network, coverage, and quality.
More information for investors in Real Estate
If you want to invest, find out more about the future of the Real Estate in Madrid., but if you are in search of a “property manager” or if you are an investors interested in Golden Visa please contact us.