To make good investments, there is a golden rule: we must seize opportunities. And by definition, large real estate investment opportunities, or any other type, occur rarely. Really work is to be pending for identification.
I have long been watching the property bust in Spain and trying to figure out when is the time to buy. Well, I think in 2014 there will be very good opportunities for profit by buying an apartment and renting it.
Obviously, there is always a risk; but let’s look at the numbers:
On the one hand , a study that says that the average return of a rent in Spain is around 4.8%.
By Communities, Canary Islands, Murcia and Castilla-La Mancha are the most profitable to buy and rent housing. Canarias offers a yield of 5.1%, Murcia and Castilla-La Mancha, 4.8% and Andalusia, Catalonia and Madrid, 4.7% or 4.6%.
The provinces where more has fallen housing prices are the most profitable, of course.
On the other hand, these are returns obtained by the rent. Still lack the profitability obtained by the revaluation of housing. Although housing to revalue, it is important to buy at a good price. We need good deals.
Fortunately today there are good shopping opportunities everywhere.
specializes in housing at a great price, up to 50% of the average price of Spain, and a 100% financing web. At present they have 600 homes at an average price of 604 € / m2.
Many real estate portals allow you to find bargains in many provinces.
Now, go up the floors in the coming years?
In the short term, it is hard to say, the “experts” are not all in agreement.
A report cited by idealistic .com says that the floors still will touch down in 2014.
Looking at the quarterly price declines:
And thus seeing the collapse of prices in euros / m2:
From the point of almost 3,000 € / m2 to today’s price, € 1,746 / m2, the fall is over 40%.
Clearly, prices are cheap. When they touch the ground?
I think in the long-term investments is not necessary to hit the floor price to buy, or the selling price ceiling. That is almost impossible.
It is easier to let prices start to rise, even if we lose part of the benefit, because there is much margin rise.
Think foreign investors, who are entering sack on investment property in Spain. At present, they account for almost 20% of purchases of flats .
Therefore, and for the long term, we’ll assume homes in the next 10 years will revalue. how much?
Well, during the boom, the floors were up around 10% annually. That can not be repeated; however, after a fall of
40%, it is logical that, as the trend is reversed, the increases will be higher than inflation: being prudent, from 3% to 5%.
That would leave us a total return of 8% to 10% annually.
Let’s be specific, defining business rules:
1º- During 2014, we see reports quarterly publishing prices . In theory, fotocasa is a
leading indicator, because it uses intentions of selling prices. In any case, two sources are to be approximately coincident.
2º- As we detect rising prices for 1 quarter , or 2 quarters remain cautious, seek good prices in the regions mentioned, the most profitable per rental.
We 3º- buy, sell and rent.
4º- After 5 or 10 years , depending on the rate of price appreciation, we sell .
We get an 8 to a 10% annual return for 10 years. Probably we do big business.
I have to say that I usually prefer to invest in stock market with my quiet system, because it is a more liquid market and especially I think I get more profitability .
But there are many styles of business, and many sensitivities, and investment property are now very tempting me.
This train will pass, and will not return in a long time ..
Are you going to let go?