Investing in real estate is one of the most effective ways to increase your personal wealth. Analytical data consistently shows that property generally increases in the long-term. Factors such as fluctuating interest rates often result in a sudden decline in property prices, but the real estate market is a resilient one. It usually has the strength and vigour to regain its former position within a few months. Even the negative effect on the market during the COVID-19 pandemic is expected to correct itself by 2021.
Real estate investment is a straightforward, highly adaptable, wealth-creating strategy. Once a property has been purchased, it provides a range of flexible options including resale, rental or remortgaging. Real estate can usually be relied upon to still provide a profit or an additional income despite alterations in the market or your individual circumstances. However, gaining the maximum return on an investment often depends on purchasing property that can easily hold or improve upon its value in the foreseeable future.
The success of a portfolio can often be influenced by the investor's choice of location. Purchasing real estate in an attractive region with excellent amenities is a vital part of an investment. For example, the Costa del Sol combines a luxurious lifestyle with magnificent scenery. It has yachts, nightclubs and almost thirty kilometres of soft, sandy beaches overlooking the Mediterranean Sea. The area is also sheltered from the north by the Sierra Blanca Mountains. Marbella in particular is a much sought after district. It includes luxury villas and apartments in elite neighbourhoods such as Nueva Andalucia. It is within easy reach of several championship golf courses, restaurants, bars and resorts such as Puerto Banus.
The outright purchase of a villa or apartment is the most profitable way to invest in real estate. The property has no debt attached to it, allowing you to appreciate the full benefit of the funds it may raise through its rental potential or eventual resale. Existing properties in Marbella and the Costa del Sol frequently maintain values that are at least 0.5% higher than other regions of Spain. In the New Year of 2020, homes in the area were rising by approximately 3%. However, the effect of COVID-19 has resulted in a general reduction of more than 6%. By contrast, the value of new-build properties generally remains unaffected.
One of the most popular ways to invest in property is buy-to-let, particularly in areas that attract high numbers of tourists. Purchasing a second home on the Costa del Sol is often a priority for Spaniards and visitors from abroad. It provides accommodation for personal holidays, but it can also be used to earn an additional passive income. Shrewd investors can usually begin to build a valuable portfolio of properties for rent with a minimum of capital. On average, a deposit of just 20% of the market value is sufficient to purchase a property. It is even possible in some circumstances to use a deposit as low as 5%. Properties in areas such as Marbella can usually command high rents, helping an investor to easily meet any mortgage repayments. Investors also have the security of being able to resell the property or using it to raise capital for further investment through remortgaging.
Occasionally, some investors find the responsibilities of becoming a landlord difficult. There is the maintenance of the property to consider, providing adequate insurance and carrying out essential safeguards such as servicing gas boilers. Vacant weeks without tenants can affect an investor's cash flow, but one of the worst hazards is trying to chase unpaid rent. However, many independent investors appoint a property manager from a lettings agency to take care of all aspects of the rented apartment or villa. It's a convenient, cost-effective solution that makes investing in buy-to-let properties easy and stress-free.
An alternative to building an individual buy-to-let portfolio is to earn a passive income through a company that offers organised property investments. These can include Real Estate Investment Trusts or Groups, Mutual Funds and Limited Partnerships. The company involved purchases multiple properties, which can include apartment blocks and shopping malls. There are various options for investors such as purchasing one or more apartments. The rents due to the investors are combined and paid out as a percentage dividend to ensure no-one is left without a regular income due to a vacant apartment or facility. Some arrangements are of a fixed length of time, reducing the flexibility of the investment. In addition, the schemes can incur high fees.
Property flipping is a short-term investment that intends to gain maximum profit through a quick resale. A popular method is property development, where the investor purchases a neglected property with excellent potential in a desirable area. Many investors aim to achieve a substantial profit through completing a renovation in as little as three or four months then immediately reselling the property. An alternative is to purchase a well-appointed property when the market is in decline then simply waiting until it recovers sufficiently to make a sizeable profit through a prompt resale.
The wisest decision a property investor can make is to appoint an experienced, local real estate agent. It really helps to make your search potentially fast and rewarding. At Questates, we offer a highly personalised service to help you find the most suitable properties for every type of investment. Our local knowledge of the luxury apartments and villas throughout Marbella and the Costa del Sol is exceptional. As a well-established real estate agency, we have an excellent network of contacts to help put you in touch with acknowledged experts in finance, architecture and construction. We can help make your property investment search easy, profitable and worthwhile.