Buying an apartment and then renting it out is one of the most widespread practices for investors looking for a medium return and low risk. In this week''s blog, we will assess the pros and cons of this type of investment in Barcelona in 2022, and analyze the points to keep in mind if your goal is to invest in an apartment to rent it:
The clearest advantage to see in the first place is that buying to rent is one of the
safest savings options in the medium term. The current circumstances make it even more interesting:
- Volatility in the stock market and bad results (the 7 most important Ibex stocks accumulate losses since January 2022 of between 11% and 21%, according to eleconomista.es).
- Experts are not clear about the evolution of the price of gold, there is high volatility and uncertainty, it will depend on inflation, central bank policy, the war in Ukraine and geopolitical movements between countries.
- Volatility and downward movement in the price of the main bitcoin currencies.
- Although interest rate hikes are going to happen, it is still interesting because of the uptrend in prices, and high buying demand.
What to consider before buying a home to rent?
- The approximate daily expenses of water, gas, electricity, IBI and community expenses, since this should be subtracted to obtain a net yield, also discounting taxes.
- Buy at a reasonable price according to the neighborhood, the size of the property and everything that adds value: orientation, rooms, terrace, possibility of parking, good transportation and neighborhood.
- To establish a coherent price and in agreement with the market, that will make that there are no "gaps" between a tenant and another one, so that the property will always be renting. In the case of temporary rentals, it must be taken into account that there are higher and lower periods, so prices will have to be adapted to these circumstances, they will not always be homogeneous.
- The existing rental demand: both Barcelona and the beltway are not able to absorb all the demand of different types of people who want to live in the city; students, families, foreigners... So the question is one of numbers and short, medium and long term objectives.
- The profitability is calculated with a very simple formula: the rental price of one month multiplied by the 12 months of the year, and divided by the initial purchase price. For example, let''s look at the case of an apartment that cost 300,000€ to buy and is now being rented at 1200€/month.
The formula would be: 1200 x 12 = 12.000
12.000 / 300.000 = 0,04% x 100 = 4%
The yield would be 4%.
- Taxes payable on the purchase
- The taxes payable on the profit made.
So, is buying for rent profitable?
Although it is a question of numbers, we must take into account that in addition to the fact that this amount pays the mortgage, we make a profit and benefit in the medium term from the increase in the value of the property. In 2022, according to the newspaper Expansion, between 2% and 6% is what the experts expect. As we have already mentioned, this is a moderate increase. Although this number is a weighted average, in Barcelona, since before COVID, the price increase has reached 20-25% of its value.
In ATIPIKA, what we have observed during these two decades of trajectory is that he who does not lose is the one who wins, and in the real estate market, in the medium term, almost always wins.
All this and more observations lead us to the conclusion that it is indeed profitable to invest in Barcelona by buying an apartment to rent.
If you are interested in this service, you can consult our section
ALL IN ONE, All in One Service - Atipika Lifestyle Properties where we explain everything about this 360 service to the buyer, intervening in any of the steps. We offer this service in all the areas where we operate, find out more in our offices in Barcelona, Castelldefels or Menorca.
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