Rent v Buy in Spain

[saiguanas]

We ar planning a semi retirement in Spain. This is still 15-20 yrs away. I have been browsing some of the newspapers online and from some of my memories while stationed in Spain it seems that renting an apartment or house is pretty cheap but to actually buy is very expensive compared to what I am used to at home.

For instance, I will see homes or flats for sale anywhere from 190,000 Euros to 300,000 Euros and much more. The same types of Rentals will only be 500 Euros to 700 Euros. Here in Texas the comparative homes may run between $100,000 and $250,000 and to rent a home in those price ranges or an apartment it will run $1000 to $2000. The price to rent is usually close to the same as a mortgage payment would be to buy. The only reason to not buy is not having the cash for a down payment or not being able to get the bank financing. Now these are not scientific comparisons and my figures may be off but just at a glance, it seems that the gap between rental and purchase price in Spain is much larger than the gap here.

Am I correct in my assumption that it is very cheap to rent and very expensive to buy?

(see what I mean about having trouble with my native tongue?;D )

[saiguanas]

Reminds me of another question.

What can you expect to pay in utilities for a 2 or 3 bedroom flat in the city or home in the countryside? And is cable tv widely available? I remember seeing A LOT of roof tv antennas in Sevilla.

(Electric, water, phone, cable, internet)

[greytop]

The main reason to buy is that your money is not completely "lost". What you spend in interest you hope to make up in capital appreciation. Any money paid as rent is gone forever.
As you have not specified any particular area it's hard to say which would be better, but probably best to rent somewhere for say 6 months while you make sure you want to live there!
Each time you buy / sell a property you incur a fair amount of expense, allow at least 10% for taxes and fees. Also new properties are usually quite basic and may need money to equip with heating, air con, lights, security grilles and so on.

[saiguanas]

If we were to decide to split time between Spain, Austria, and the US, would it be easy to rent out our home during the months that we are away? Is the rental market really good.

We are probably looking somewhere in Andalucia. Near or around Sevilla. I prefer IN Sevilla but my wife would like a home in the country. It's funny because here at home, we are the opposite. I want to live in the country and she wants to live in the suburbs. Guess where we live?

Me->:hammer: <-Her

[eldeano]

Guess where we live?


Next door to me. :D

[Ben]

If we were to decide to split time between Spain, Austria, and the US, would it be easy to rent out our home during the months that we are away? Is the rental market really good.If you are just looking to rent the place for a few months at a time then location would be very important. I would say it would either have to be in Seville centre, so that you could rent to language students spending a while in Seville for example, probably managed by an agency, or it would have to be out in some stunning Andaluz village or bit of countryside where you could organise tourist rental easily. I think the rental market is probably pretty good if you are in the right place.

[rod]

For short term rentals time of the year is also very important. If you bought a place in central Sevilla and then were prepared to move out and rent it out during April when Semana Santa and the Feria are on, you could make a lot of money. I have seen apartments rented out for double the normal monthly rent during April, even on occasions four times the normal monthly rent.

By contrast you can't expect to get much of a rental income during the winter months in the countryside. I lived on the Costa de la luz from October to January 2005/2006 and as a tenant was easily able to find a whole house for €320 a month including electricity (which because it was so cold I used a lot of!). And that wasn't unusual - one friend of mine got a flat for €240 a month inclusive. Taking into account that the landlords were still paying all the utilities, they didn't make much out of us. But then of course they would expect to make a huge amount more during the popular times of the year if they were prepared not to be there themselves. So timing as well as location is everything in terms of short term rental income.

Overall though I have a very similar dilemma. I intend to move back to western Andalucia this year but am divided between Sevilla and the country, ideally close to the sea. I lived in central Sevilla for over four months last year and loved that there was so much going on within walking distance, but it is so expensive now to rent or to buy near the centre (if you're lucky enough to get a long term rental, €700 a month will get you a small two bedroomed flat in Triana) and my income is going to be uncertain to start off with. I suppose the outskirts of Sevilla would be cheaper but that would be missing the point, I'd rather be in the country. Your money can go much further in the country, but then there isn't so much to do :confused:

[Jerezano]

With regards to the renting vs buying issue, it is true that it is still usually cheaper to rent as opposed to buying. I would imagine that there would be a number of reasons for this, not the least of which is the fact that a lot of places for rent are homes/flats that have been in a family for a long time. Many of my family friends' parents bought cheap apartments in the 80s and 90s when prices were very low, as investments. Demand also dictates that there is only so much you can get in rental. Here in Jerez, though rental prices have gone up considerably, they are still far below what a lot of average new mortgages are. A lot of people have bought new or second hand homes with the offers of 0% down...as speculation grows that the Spanish real estate market will slow down (some even talk of the dreaded "bubble") there is a risk of a lot of people ending up with negative equity. Maybe someone can shed a different light on this issue but I don't see property values experiencing the kinds of increases that we all saw in the last 5-7 years....

Though it is possible to rent out your place whilst you are away, I think it would be difficult to manage, unless you let it out long term, in which case it would limit when you would be able to reassume occupancy of your property. My understanding is that by law, after a tenant has lived in a property for longer than six months, they are entitled to continue renting the property for a period of five years. Evicting a tenant in Spain is also more difficult in the US, here the rights are firmly on the side of the tenant, not the landlord.
I can tell you that with regards to the holiday property/ self-catered apartment market, a lot of the business is seasonal-outside the major holidays and fiestas places spend long periods unrented, something well worth being financially prepared for.

[djS]

yes cables is in spain but most get D+ pm me on that one fill you in there

buy is good as you own it out right and that it renting and you could get a nice place are a bad place

what i would do is rent the frist time you come over and then try to buy and next time come over you own what you like

paper work in Spain is slow and will drive you up any wall
jurdy

[djS]

Madrid property for sale any one know anygood companys ie looking for Flat and Shop 2000sq feet 3000sq feet loacla


jurdy