Investing in real estate on Costa del Sol, with yield of 20% per year – Step-by-step Guide
With Luks Marbella Investors Club, Property Investment just got easier, safer and a lot more exciting!
Although many foreigner buyers are interested in investing in the booming property market in Spain, and in particular on the sunny Costa del Sol, the majority of prospective investors are put off by what seems like a complicated process, bureaucratic and fiscal confusion, saturation of real estate agencies, language barrier when dealing with local banks and organizations, and not least of all – horror stories of fraud and incompetence.
Subsequently, and unsurprisingly, some decide not to take advantage of this highly profitable investment option, in order to avoid all the possible traps and hassle, and instead, prefer to continue with the perceived safer option of keeping their capital in the bank, bonds or a corporate fund, earning them a modest yield of 1-5% per annum.
So, let’s use a real practical example of property investment with our Luks Marbella Investors Club , in order to better understand and de-mystify all the elements of the process involved in such a transaction.
First of all, prior to presenting ANY investment proposal (even in the case of property capital investments as low as €30,000), our independent financial advisor (fully qualified and certified by the EFPA – European Financial Planning Association) thoroughly reviews and analyses all the specific information related to the proposed investment.
Our advisor performs a variety of viability and due diligence studies, including the confirmation of the market price of the property, calculations of various investment methods and options, mortgage availability and terms, as well as getting the quotes for any required renovation or refurbishment, and receiving a formal offer from the short-term rental agency with the expected holiday rental income.
Practical case: A top-floor studio apartment in the town of Benalmadena, with sea views and a 24/7 concierge service, several swimming pools and within walking distance from one of the best beaches on the Coast
Current sale price: €73,000. Current market price valuation: €92,000. Conservative estimate of its market price in 2 years´ time, taking into account recommended renovation and interior design: €100,000
Capital Investment required :
(*For this case we recommend using a specially created legal entity in the form of a Ltd company registered in Spain, in order to avail of the tax benefits. The cost of incorporating this Ltd company is already included in the calculation below)
- Deposit: €29,000 (representing 40% of the agreed sales price, with the remaining 60% to be financed through a mortgage)
- Property purchase costs, including taxes and mortgage set up: €6,000
- The apartment requires a cosmetic renovation and new furniture, total cost: €7,000
Total investment: €42,000
Profit over 2 years: €17,700 (42% over 2 years, 21% p/a)
The 10 step-process for the investor, using Luks Marbella Investors Club services (if desired, the whole process can be completed remotely, from anywhere in the world, using the Power of Attorney issued in the name of the local lawyer that will be representing the buyer; the cost of such POA procedure and a remote issuance of a Spanish National Identity Number required to buy real estate in Spain: approx. €350):
- Making an offer to the seller (for the full asking price, or a reduced offer)
- Once the seller accepts the offer, the buyer transfers to the seller a deposit (to reserve the property). In this particular case, the amount of this deposit is €3,000.(The provisions of the agreement between the buyer and the seller indicate that the property is reserved, subject to completion of the transaction within a set period of time, typically in 2-3 months).
- Submission of the mortgage application form, accompanied by all the necessary documents required by the bank.
- Once the mortgage loan has been approved, the buyer transfers to the bank remainder of the funds (the down-payment of 40% of the property price, and costs related to the mortgage loan and the applicable fees and taxes).
- Signing the property sale agreement and the transfer of ownership.
- Approval of the design and renovation proposal with a staged payment schedule
- Sign off on the homeowners´ household contents and maintenance insurance policy and the application form to the local administration in order to register the apartment as touristic accommodation (the total price for both of these is approx. €400).
- Signing of the short-term lettings agreement with our recommended partner agency.
- Receive income from the short-term rental; our investors are also offered the secure option for a guaranteed fixed monthly income, in this particular case it would be of €8,000 per year.
- Future re-sale of the apartment – with our recommendations and assistance, with the profit of €22,000 (including cost of sale); Repayment of the remaining mortgage loan.
In order to make this process as simple, secure and profitable for our investors as above, our team will work hard on your behalf and put in the additional resources and effort, so that you don´t have to!
We will research, facilitate and prepare the most beneficial personalised solutions to you, at no additional cost, in order to optimise the investment process, and minimising your time, costs and efforts, including the following free services:
- Personal consultation and search and pre-selection of the properties in accordance with your budget, priorities, desired location and requirements, including your particular financial and fiscal situation
- Detailed business plan for each of the proposed investment properties, including market price analysis (current and estimated forecast), as well as professional evaluation of its short-term rental income potential
- Personally accompany and assist during viewing appointments and follow up
- Assistance and recommendations with the legal and fiscal issues
- Preparing and facilitating property´s bank evaluation and technical inspection; checking the legal and ownership rights of the seller; evaluating the financial state of the apartment (e.g. any tax debt etc)
- Pre-enquiries on mortgage availability and conditions, assistance with the application and selection of the best mortgage loan option
- Management of the renovation and refurnishing quotes and process from our trusted suppliers; assistance in complying with the current local regulations regarding the use of the property as a rented holiday accommodation
- Recommendations and selection of the optimal home insurance policy, as well as assistance with the official registration of the property as touristic accommodation
- Arrangement of short-term rental using the services of our trusted local partners (including all the related services, from cleaning to small repairs)
- Consultations and help with the future re-sale of the property
Avoid risks, pitfalls and time consuming search and verifications, take advantage of our wealth of knowledge, unlimited access to 10,000´s of properties and agencies, reliable local contacts and partnerships in financial, legal, banking, construction and property management sectors!
All our consultations and advisory services are confidential, no-obligation and free of charge, so absolutely nothing to lose and much to gain!
Don´t hesitate to contact our experienced team of professionals today with any questions or enquiries regarding your investments and property purchase: you can reach us by calling or WhatsApp: (0034) 616 750 804, or by e-mail: firstname.lastname@example.org