All Forum Posts by: Erwin Groenendijk

Hi @Johan Petter, good to see someone else from the area in the forums. I also got started as an expat in Barcelona and in the end living here for almost 8 years.

Let's first start with your questions:

- Banks will normally give you 80% LTV for the first two mortgages. After they rather like to give something lower bit by bit. So your downpayment would be 20% + purchase taxes of 10%

- Not sure how you wanted to spend your 60k and if you were calculating renovation inside of this budget next to the down payment and transfer taxes

- It is worth buying in- or outside Barcelona if you know what you are doing. I would advise to become an expert and choose one of them  

- A M2 price for a renovation depends on the quality you are after. This could range between €500-1000 if you are not touching any structural parts

- The ley de la vivienda is applying for long-term contracts and yes you should have this in mind. We try to play in the mid- and short-term space where this law is not pointing at (so far). However, now with the elections being favourable, let's see what and how much they will really apply.

- Of course that renting can be a good way to pay your mortgage and make a profit. That is what we all do. You should make your calculations and see if the deal makes sense. Also think about what rental strategy works best (traditional, mid-term. perhaps short term if you can still manage to get a license for this)

Not completely understanding what you mean by that flipping at these values doesn't make much sense but guide me here in your thinking.

As far as I know is that Spain is not taxing worldwide income on its residents 

Hi @Nina Erlandson, yes we just had our last one last Wednesday and we were talking about the new Spanish housing law in Spain (nueva ley de la vivienda). 

This was an interesting one because this new law will affect everyone in some way or another that is investing in Spain.

You can send a private message so we can add you to the group. 

Hi guys, we are investing in and developing STR for investors here in Spain where we also live. The time difference is something we can't do anything about of course, but as far as the other points, we know a thing or two.

A property management company will charge you anywhere between 20-30% of the gross rental income and will take care of most you need to consider: bookings, customer service, maintenance, reviews, and cleaning. You as the owner would still need to oversee the occupancy, prices, and the total income they are generating. 

I wouldn't worry too much about knowing the language because the property management company will be able to speak English and most of the time your bookings will be with international people. 

@Tom Brown I've been quickly going through it and it looks quite solid. Not sure if you are including mortgage payments in your income statements.

The height of the amounts is more difficult to analyze when you are grouping everything in operational costs for example. 

Where is the property located? For a purchase price of €200.000 achieving almost €47.000 of expected rental income is not bad at all.

@Edward Stephens, like this nobody ever will get motivated to start something ;-)

@Jeulissa Gonzales, he is partly right though.

Some things to have in mind when renting by the room is that there are all kinds of different people living in the same house which could get friction (by the way, a lot of times it also leads to friendships or even entrepreneurs that start a business together like it was in my case). To overcome most of the common issues is to have at least good customer service, management, maintenance, cleaning and rental teams from which we have been seeing for the last 4 years having 350 rooms in our coliving portfolio in Spain.

@Mike Lambert have to admit that in my first reply I also had to double-think about including the property management or not. Hope you are well and congrats on your apartment in the Costa del Sol. 

@Chris Tedeschi on average you will find a higher m2 price in the Costa del Sol because there are a lot of new developments. Also in the Costa Brava going up from Barcelona this is mostly the case in the more popular towns. In the Costa Blanca and Valencian coast, the m2 prices are generally lower. 

This is how we can offer a relatively low investment entry barrier (to first try out if Spain and this area are fitting the needs, which mostly after starting it immediately does) and offer good returns.

The difference between our projects and these new developments is that with these new developments, you can buy off plan when it is almost finished or buy a completely new apartment to immediately start renting it out. You basically pay the margin of the developer. This is fine when the investment still makes sense of course.

However, what we normally try to do is keep this margin for ourselves and step in from the beginning (lower total project costs and because of that higher returns). The downside though if we can call it like that, is that it takes a year to complete the project and be able to rent it out.

Have a good weekend guys  

Thanks for explaining everything @Chris Tedeschi. 

@Mike Lambert, although the 5% CoC looks a bit low, after including all the costs including the property management commission etc. making multiple times more than this is also getting tougher.

Chris, why we are making 10-15% CoC is because we manage to buy tourist units for a very low price in Valencia. We are transforming the ground floor of buildings because that is still the only way to get the licenses there. Buying them at a low price makes it possible to easily get good investment yields. As an example: the total costs (including purchase, renovation, and all other costs) of these units are around 100.000 and most of the time you can easily rent them out for 2.000 of monthly income. Also here the lower seasons are not that low because in winter periods a lot of people are still visiting a big city of Valencia.

Now, keep in mind, these are not new development units with sea view. These units are pure investments however still quite nice to spend some time in it yourself as well.

Different properties and a different focus. Both work.

Hi @Chris Tedeschi,

Nice and congrats on finding the project.

The 5% CoC return seems a bit low to me. We are doing multiple projects like this in Valencia where we are hitting 15% quite easily.

It all depends on the price of the project in the end. 

Could you explain more about the numbers, location, project, etc?

@Jose Alberto González, send us a message the next time you are coming to Valencia for a coffee and talk further.