You’re thinking, how long is a bit of string aren’t you. Asking or deciding whether the full spectrum of property types in an entire country is a good investment based purely on who it is being sold by (bank owned) is like deciding whether a restaurant has good food based on the colour of its curtains.
It might not be accurate but it sure is fun (the properties one, not the curtains) so let’s have a crack at it anyway.
The simple answer to the question yes, as long as you choose and do your sums carefully. Below market value property is almost always a good investment, but not all the below market value properties in Spain are below market value properties. Below market value property means property at the given percentage below its current market value, many of the BMV properties for sale in Spain are still quoting the discount from their 2008 price, which is varyingly different from true market value depending on where you are.
For example bankrepossessionspain.com has a wide range of Polaris World resort properties that are being sold off as bank owned and are at very good prices. However, it is very difficult to say what the true value of the properties is at the moment. But being able to obtain the true value is only one way of gauging investment potential, especially of Spanish resort property.
When you invest in Spanish property you do so as a buy to let investment; with the intention of making a regular income from renting out the property, often with plans to make use of the property for one’s own holidays as well. No matter what anyone says Spain is still and always will be one of the world’s top tourist destinations. This opens up a whole new aspect to the investment, where we compare the sale price not to its true value, but to the amount of money the property can make in rentals.
The best way to do this is to book an inspection trip to one of the resorts and speak to as many owners as possible to find out how much occupancy they get and at what prices. You can also check rental rates on sites like holiday lettings.co.uk and even call up owners of rental properties trying to haggle on the rental rate – you know if they are willing to negotiate a much lower rate then rental properties in that area are probably struggling.
In the first place you will want to choose an area that is not oversupplied, and again, sites like holidaylettings.co.uk are a good source of this information. If you can find a resort or area that has very few properties advertised and get a good deal on a property in one of those locations then you are onto a winner, whether it is bank owned or not.
Where bank owned property in spain comes into its own at the moment is the mortgages. The banks are so keen to get shot of these properties off their books that they are willing to lend 90-100 percent of the price. If you can do your sums and find a property that is going to earn enough rentals to cover the mortgage then you are onto a winner.
Then it is about capital appreciation. In all likelihood Spain’s popularity as a tourism destination will win out, the oversupply will be absorbed and the market will recover, even if it takes 10 years. Then we will see prices growing rapidly again and capital appreciation will be strong, especially on the cheapest bank owned properties.