5 Factors to Consider When Buying Property to Rent Out in Barcelona

Both small and large investment companies are familiar with the real estate market in Barcelona. Buying property to rent out is getting more popular than ever due to economic circumstances.

As always, real estate trends change frequently, and so does the trend of buying a home. No longer does everyone buy a property to then go and live in it. Many people are taking out a mortgage to purchase an apartment to rent it out. This means one can benefit from the property continuously and for a long period of time.

Keep reading this article if you are ready to find out what five factors you should take into account when considering buying property to rent out.

Table of Contents

1. Can you profit from buying a rental property?

The first question that pops into your mind when wanting to invest in real estate is: Is it profitable to invest in a buy-to-let property?

Data from the Bank of Spain has shown that yields on properties were an average of 6.9% during the first quarter of 2020, and this is well below the 10.7% of that same period in the year before. It is, however, still much harder to find the same percentages in other financial products, as nothing is as solid as investing in bricks and mortar.

Despite the drop in profitability due to Covid-19, buying property to rent out is still an excellent investment, as the rental market generates a steady income.

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2. Can you take out a mortgage on an apartment you will be renting out?

Once you agree that purchasing a buy-to-let property is a safe investment with high yields, here comes the next question: Will you pay for the property yourself, or do you need to apply for a mortgage?

If you are a big investment company and you have enough means to invest in the property yourself, then you don’t really need the bank. Smaller investors, however, should be aware that you can actually apply for a mortgage in order to buy an apartment that will be rented out.

You will then receive monthly rent from your tenant, and you will pay your monthly mortgages and pay back the bank. In addition to this, with each new rental contract, you can change the price of your rental property.

This trend in the real estate sector is really gaining ground, and we see more and more people buying their first home, to then rent it out. We even notice people renting out their own property, while living in a rental apartment themselves.

Of course you have more options than renting out your property as a long-term rental. You may want to put your apartment on the market for shorter periods of time, and – if you have arranged for the right license in Barcelona – you can even rent it out as holiday accommodation.

📌 Make sure your mortgage does not exceed 40% of your gross monthly salary. Always consult a financial expert.

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Trust our real estate professionals

3. Advantages and disadvantages of investing in buy-to-let properties

If you have come this far, you must still think it is a good idea to purchase an apartment and rent it out in 2021. That is why we have come up with a list of positives and negatives to help you decide on this investment:

Advantages:

Any investor understands what kind of investment housing is. Almost everyone, at one time or another, has some experience with the real estate sector, whether it is with buying or renting an apartment.
A steady and profitable investment. As already mentioned, few financial products offer the same long-term yields as real estate.
If you rent out the property with long-term contracts, you can deduct up to 60% of the total amount of rent it generated.

Disadvantages:

Initial investments are high, and you will be paying mortgages for a considerable number of years.
It all depends on the tenant, but you run the risk of unpaid rent, delays in rent and squatters inside your apartment (if it is empty).
You need to have the time and energy to manage a rental property, for example: searching for the right tenant, taking care of repairs, taking out insurance, being present during apartment building meetings, taking into account changing legislation.

ShBarcelona is an experienced real estate company and aware of all the problems that might occur. We offer tailor-made solutions for each and every property owner. So if you only want to benefit from the advantages and not worry about the disadvantages of putting a property up for rent, you can rely on the services of our real estate company.

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4. Where to invest in property to rent out in Barcelona?

Once you have reached the conclusion that it is smart to invest in buy-to-let properties, the only thing left to do is discover where.

If you are still interested in buying a rental property in Barcelona, you can absolutely not go wrong with doing so in the districts of l’Eixample or Gracia. These are, after all, the most sought after places for people who visit Barcelona temporarily.

ShBarcelona specializes in monthly rentals in Barcelona, and this is a perfect solution to guarantee high yields on your rental property.

Temporary rentals are generally more profitable than long-term rental contracts, because most of the time you sign monthly contracts more often during a year.

The profile that can afford monthly rentals is, overall, more wealthy too, as it concerns master students and employees who come to Barcelona specifically for work.

5. Does the perfect property to invest in actually exist?

This might be the million dollar question. Once you have decided to buy an apartment that you are not going to live in, you will probably not be looking for the perfect place anymore, because you will not move into the apartment anyway.

This doesn’t mean, however, that you shouldn’t look for a comfortable and attractive property, because life is full of surprises, and you might end up living in that property.

Just keep in mind that your main reason for buying a rental property is renting it out and making money, rather than providing a home for your family.

According to our own research, most temporary tenants in Barcelona prefer apartments that meet the following conditions:

apartment with two bedrooms
located in l’Esquerra de l’Eixample or La Dreta de l’Eixample

These types of properties are most sought after by master and postgraduate students, as wel as expats who move to Barcelona for work. Other tenants who visit the city for a period shorter than 11 months have various reasons to do so.

Rent out your property per month?

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To sum it all up, buying an apartment to rent it out is a great opportunity if it’s not your plan to live in the property. You will have a fixed income every month from renting out the apartment.

Despite decreasing prices due to Covid-19, investing in the real estate market is still a guarantee for a secure and steady future.

Do you think you will be investing in a rental property?
Share your thoughts or ask your questions below!

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