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5 common mistakes when investing in real estate in Spain

Monday, June 1, 2020

Recently we've been doing our free weekly Live Q&A Sessions on Zoom, and many of you have been asking what are the top common mistakes people make when investing in real estate in Spain? So here we go!

EDUCATION

The first most common mistake is, people decide to invest their money, all their savings or even a mortgage from the bank without enough EDUCATION about business or the real estate market in general. This is a big big problem because you have no idea what's involved in managing your real estate investment and making sure you will generate profits and not loose all or some of your money. We are in the 21st century and there are many ways to grow and expand your knowledge. Find yourself a mentor who is successfully investing in the type of real estate you're interested in, follow them, see what they're doing, listen to their podcasts, watch their videos if they're on youtube and continuously grow your knowledge. There are many ways to educate yourself online for free, there is information everywhere, don't be fooled that the best way to educate yourself is by purchasing an expensive online course or paying €25K to attend a seminar where someone will simply try to sell you a book or something else. Don't get us wrong, seminars and networking events are great for finding new connections but you must use them to the best of your ability, speak with people, connect and look for new opportunities.

LAWYER

If you think you have educated yourself enough and you feel confident to start investing, the first thing you should do is begin cooperation with a lawyer. The second biggest mistake is thinking you can manage WITHOUT A LAWYER, listen you are wrong, you need a lawyer. Find a lawyer from your area of interest, if you're investing in real estate there is no point in cooperating with a lawyer specialising in the fashion industry, get a stable lawyer from real estate who can give you advice from their own knowledge and experience. You will need a lawyer almost every step of the way, whether during analysing a property to ensure it fulfills all legal requirements, has its first occupancy so you can use the property for rental (without this document you cannot rent the property legally), there is no hidden debt behind the property or other problems which owners may be trying to hide from you. Your lawyer will also need to prepare all your documentation in relation to purchase or later when operating the property for rental and also sale, if you choose to sell in the future. If you encounter any problems with tenants or lawsuits, without a lawyer you will be in deep trouble.

BAD AGENT

Third most common mistake? partnering with a BAD AGENT! What do we mean by this? Most if not all agents who help you to find a property to buy, are focused on selling you a property that will be profitable for them, not for you. Agents like most people, look out solely for themselves as its their job to sell, sell and sell to create a living for themselves. Most agents have such experience in sales they can make you look at an absolutely rubbish property and present you with a detailed and expressive vision of how amazing this property can be after renovation, you will not only be tempted but completely persuaded to buy it. Our advice is to ask your lawyer (which you should have like we mentioned before) to suggest an agent whom they have worked with previously, and who will honestly help you find something that matches your requirements and will benefit both you and the agent.

DUE DILIGENCE

Even if you overcome the previous three mistakes or don't make them, the fourth most biggest mistake is completely trusting what people tell you or what you have read on forums online. You must do your own DUE DILIGENCE in every aspect of your investment and verify what is right and wrong. Do intensive research about properties, locations, high and low seasons, in our previous article here you can read about factors to consider before investing in rental properties in Spain. Before you purchase any property, check what properties other holiday rental companies use and in what locations, you will get a fair idea of what rent you can charge from certain properties in certain locations. With holiday rental properties close proximity to the sea and restaurants/bars is key, but again you will read our specific advice in terms of location and needs of tourists in our previous article here.


RED FLAGS

Common mistake number 5? AVOIDING RED FLAGS. No matter what stage you are at with your investment in real estate, keep an eye out for red flags. Whether its at the beginning and you notice the owner of the property you want to buy acting strange and sooner then later you realise there is debt on the property and the bank is now involved trying to take it over, this is a red flag meaning you should let go of this deal and find another one. Do not waste time trying to fix something you can't. if you notice your agent offering you propositions which do not seem profitable, let go, find a new agent that is reputable and whose cooperation you will benefit from. Red flags can appear everywhere, keep your eyes open and avoid even the smallest slightest problem before it turns into a big problem.


These are just a few common mistakes of many, we noticed people make. As you can see a lot of work goes into investing in real estate and more precisely rental properties in Spain. There is many mistakes that people make and don't succeed with their investment, for this reason we allow beginner investors to join our free Q&A on zoom and grow their knowledge about real estate and investing. We want to show you from our own live experience, what's involved in each step of investing in rental properties and allow you to adapt this knowledge into your life. If you're only beginning to learn about real estate but have funds available for an investment, you can be a part of our business and benefit from what we do, before you start your own real estate business.


To learn more about real estate in general, sign up for our free weekly Live Q&A with our CEO Lucas Salamander every Friday at 8pm CET. If you're interested in finding out more about our business you can schedule a free 15 minute call with us here.

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Monday, June 1, 2020