New member from Boston -- Investing in Spain

[Spencer Feuerbach]

Hi! Awesome to read all of the posts and replies on BP...I can tell this is going to be a great resource for me.

I'm new to the real estate game and see my first investment being in Spain (I'm moving there this fall and the plan is to be there long term. I'm 24.) My plan there is to focus on long term rentals. Buy my first property to get my feet wet and go from there. House hacking with the first property would be nice if I can find the correct space and deal. 

I have some contacts in the country who can lend a hand getting me plugged into local networks. Of course I still need to decide which part of the country I plan on investing in (it's possible I'm moving around the country frequently in the first year, so that is making me think about the most ideal location for an initial investment).

Once established and with a track record in Spain, I plan on making my first investment here in the US, most likely in the Boston/MA area.

In any event, I'm excited to connect and learn from those in this group.

If you know anyone with international investment properties or contacts abroad, especially in Spain, I would love to connect!

-Spencer

[Mike Lambert]

@Spencer Feuerbach

It seems that you got your real estate education at a time when it might look normal to put very little money down at a very low interest rate. That's not normal and it's never been in most places across the world.

The reality is that being able to invest with a bank putting up 70% of the purchase price at a low interest rate is an excellent deal. This is what I've been getting and we're sitting on huge gains because we're buying right so we're enjoying huge capital gains in a record time with high short-term rental income to boot.

Because LTRs aren't very profitable there, you won't get a high return if you have to put down 30%. That's the fault of the business, not the fault of the bank.

Also, Spanish banks are very conservative in several respects:

1. They generally don't like rental properties because they think it's too risky (low profitability and tenant rights)

2. In order to qualify for a resident loan, you might need 2 years of Spanish of W2-style income. Otherwise, you'll need 2 years of US W2 income. Business income might work but it's more difficult. Also, bear in mind that the DTI ratios are much less favorable than in the US.

3. It isn't that easy to qualify. For example, we had a deal for which one of our investors, a US high net worth business owner, was making several times the amount of the mortgage in cash every year (properly documented) and yet the bank would refuse to give a mortgage. Thankfully for him, he still could get into the deal as a co-investor.

There could be exceptions but do you want to base a business model on exceptions. Spain is a great place to invest provided you do what works there. Trying to duplicate what works in the US (that you learn here) oftentimes won't work.

Hope it helps!