Spain, a promising region for a good rental yield

With 82.7 million tourist admissions in 2018, Spain was the second largest tourist in Europe and even in the world, just behind France. This can be blamed in particular on its sunny climate and its natural as well as cultural, historical or architectural riches. Therefore, this country is also a rental investment of choice. Its major advantage over its great rival neighbor lies in its fairly attractive prices.

Rental yield, or rental profitability

In order to visualize what profitability to expect from a rental purchase in Spain, a crucial notion must be taken into account: that of the rental yield, or rental profitability. This is a key indicator for any real estate investment plan.

Concretely, to put it simply, it is the profit generated by a possession according to the purchase price of this possession. 

The calculation of the gross rental profitability is extremely simple, you have to look at how many percentages of the rental purchase price represent the income generated annually by this rental, we thus obtain a gross rental yield of x%. 

To calculate the net profitability, it is necessary to deduct from this sum the various charges and taxes to be paid: co-ownership charge, IBI or property tax, income tax. 

For income tax, for example, 19% of the amount obtained will have to be withdrawn in the case of an income bracket equal to or less than 12,450 euros. 

Investing in Spain: a real good idea

Concretely, in the case of the purchase of a property on the Spanish territory, if one manages its rental well, one can still hope for returns equal or even higher than 10%. 

The main reasons for making a rental purchase in Spain are the very moderate prices, the growth and valuation of the real estate sector, and finally the excellent economic growth at European level, which causes an increase in domestic consumption and also investments. 

In general, it can be said that buying a rental in Spain is an extremely profitable investment. This country is very popular with people who want to travel for a whole year.

The strong profitability of Spanish real estate is solidifying year after year thanks to the increase in rental demand. It should be noted that, since 2001, the Spanish government has implemented measures with the aim of upgrading rentals, which has resulted in a stimulation of the rental sector and an increase in geographic mobility.

The criteria to take into account

That said, you must be aware that the profitability of your rental investment in Spain depends on several criteria. Before your purchase, find out as much as possible about the health of the market. To do this, we must first examine the real estate offers on the website of Spanish agencies.

Then, you have to keep abreast of market developments by referring to reliable sources. The main thing is to be able to determine the average prices per square meter set up, as well as the rental profitability. To do this, refer as much as possible to the Idealista.com site. Do not hesitate to ask for advice from various real estate specialists, for example notaries, real estate hunters ...

Of course, the rental yield that we can expect will depend on the property in which we have invested, as well as its location in the territory. The result obtained can be very different depending on whether you buy a property as a residence, a commercial space or a garage.

Overall, residential property should be preferred, followed by commercial premises. Prioritize cities and areas where average prices and purchases / sales are increasing the most. To cite an example, some rentals in Madrid have recorded a cost increase of around 20% in one year.

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