10 steps to buying to let in Mallorca
Are you thinking about investing in property to let in Mallorca?
Fantastic modern villa in Puerto Pollensa
Buying property to rent in Mallorca is an attractive income investment in a climate of low saving rates and a volatile stock market. In Mallorca it is also feasible, the holiday rentals market is strong and if you tweak your property just a little, you can be sure to rent it. It is a seasonal island however, and so you will be looking at 6 months of weekly holiday rentals on your investment property to rent at the most.
If you are buying property to rent, it´s important to get it right
Beware of low rates, mortgage rates rise and interest rates will rise again. However, in Mallorca, lower house prices, rising rents and better mortgage deals make buying property to rent a viable investment choice. Added to that is the booming holiday rental market in Mallorca which offers the possibility financing your investment and covering ongoing costs so you can buy your villa in Mallorca, have a property to rent and not drown in the process.
Buying property in Mallorca and enjoying it too!
You want to buy a house. You have already set your heart on that wonderful private villa in Mallorca. Endless sun bleached days stretch ahead of you like honey. And then reality hits, buying property in Mallorca really is too much of an extravagance, a luxury perhaps you can´t afford, specially if you only plan to spend short periods in Mallorca. If you were to make the property pay for itself however, if you could rent it in the summer season and keep your villa with its private pool, shady terraces and mountain views, rent it part of the year and turn your frontline villa into an investment property. It is an option and a good one too, buying property to rent in Mallorca, have a holiday home, rent your property as a holiday villa and keep your new residence while it pays for itself.
How to get a licence to let your Pollensa property out as a holiday home
This is a heated subject at the moment, with town and regional governments squabbling on the best way forward, hotel lobbies insisting on more controls on rental properties and owners uncertain how to proceed.
With regulations and laws changing all the time, the best way forward is to make sure all the paperwork on the property is in order and up to date. For help obtaining the required licence, Sol Mallorca Real Estate can assist you, and show you how to go about applying for and getting a rental licence.
For more indepth information on this, please READ : Renting your property in Pollensa
10 things to remember when buying property to let:
1 - Research the rental property market
A high rate savings account no longer brings the returns it used to and buying property, a villa, house or holiday home to rent offers promising rewards. There is a wealth of property to rent in Mallorca, scattered all over the island, and the rentals market is booming. There is a risk of buying property to rent just anywhere in Mallorca however, in an area which is less attractive to the villa rentals market, so research the island well.
2 - Choose a promising area
Promising doesn´t mean more expensive or cheapest. It does mean however, that the villa or property to rent holds some kind of appeal to your potential clients. Is it near the coast? Buying property to rent in Mallorca is not a good investment unless your property is in an attractive rental area.
Can you walk from your private villa into town? Does the townhouse have heating , will it be a good place to stay out of season? Does your apartment have seaviews? Is the villa in the north of Mallorca where the rental market is strong?
3 - Do the maths. Will buying property to rent pay the costs?
Before you even think about buying property to rent in Mallorca, sit down with a pen and paper and write down the cost of the houses you are looking at and the rent you are likely to get. Keep in mind that the rental market is seasonal in Mallorca and if you are buying property to rent make sure it is well insulated for the cold, otherwise you are less likely to rent your villa in the winter.
Once you have the mortgage rate and likely rent sorted be clinical in deciding if your investment will work out. Property to rent in Mallorca is widely sought after and a good investment but you need to check the numbers first.
4 - Shop around and get the best mortgage
If you are looking for advice on buying property to rent in Mallorca consider using a specialist buy-to-let mortgage broker. Remember asking them for information means you are under no obligation to use them.
5 - Who will rent your property?
You are buying property to rent in Mallorca. Now put yourself in their shoes! Think about your target tenant. Who are the people who are going to rent your holiday villa?
Property to rent in Mallorca is fairly strictly controlled and the clientele has become quite specific as to what they need. If they are families for instance, they will want a big property to rent in Mallorca, a villa with a big safe pool, a house with not too many stairs and plenty of space to fit all their stuff in, if they are professionals, groups of friends or honeymoon couples you will need to think about what they are looking for in a property to rent in Mallorca, what kind of holiday rental do they need and design your house accordingly.
Buying property for rent in Mallorca can be modern apartments or country villas, white washed bungalows and chalets by the sea, fincas in the country and town houses in the old town, the list is extensive and the possibilities are endless. Consider taking out insurance too.
6 - Don’t be too ambitious!
Buying property to rent in Mallorca is a good investment yet, invest for income, not short term capital growth. Before buying property to rent in Mallorca, work out mortgage costs and agent´s fees to calculate your returns. Once mortgage costs and taxes are taken into account, the returns on your property to rent in Mallorca can build up over time, and you can potentially have income from rent, pay off the mortgage and own the holiday home of your dreams in Mallorca!
7 - Consider renovating or buying inland
Employ an agent to keep an eye on things while you are away and consider the centre of Mallorca or one of the smaller towns away from the coast. Afterall nothing is really that far away in Mallorca and costs are markedly lower when you move inland. It is also worth looking at properties that need improving and factor the refurb into the cost. If you get a property for a much lower price there is far more potential for a swift capital return on your investment.
8 - Haggle - Buying property at a bargain
If you are not reliant on selling one property to buy another, then as a buying-to-let investor you have the same advantage when it comes to negotiating a discount. Make low offers and don´t get talked into overpaying! Buying property to rent in Mallorca means you are a prime client and can therefore expect great deals.
9 - Know the pitfalls - Mallorca is seasonal
The holiday rental season is short and the costs of weekly cleaning, laundry and gardening as well as general upkeep, repairs and breakages can spiral out of control. If you are keen on buying property to rent in Mallorca, calculate the returns you can expect for renting your property as a summer rental holiday villa on a weekly basis for a maximum of 6 months. Alternatively prepare your property to rent for the winter season and tap into the out of season holiday market.
10 - How hands on do you want to be?
Buying property to rent in Mallorca is the first step. Will you manage the rentals yourself or contract the help of an agent to do so? Agents will charge you a management fee buy will take care of the garden, pool, laundry, cleaning, repairs and ongoing maintanance of the property. They will also have a good network of plumbers, electricians and other workers for when things go wrong and spare you the stress and time consuming job of finding clients, looking after them and the property and making sure it is always ready for the following week of clients.