Acquiring a home owned and then leasing it is an operation that can give high returns. However, when buying to rent, many factors must be taken into account, which have to do with the price of the house, but also with the area, the available communications, the type of house or even the average rental price. in the zone. Investing without considering all these issues and doing it out of inertia, just because we have some savings available, can have serious consequences.
Hence, before taking the step, it is so important to study the operation well and, if necessary, consult an expert who can guide us, both with regard to the real estate transaction and financing. These are the factors that you should consider if you intend to buy to rent.
Factors to consider when buying to rent
Before purchasing anything, you have to make sure that the operation is totally safe. What are the factors to consider? Let’s see.
The price of the house
The lower the price, the greater the profitability obtained. To know if it is an appropriate purchase price, it is best to know what is the average price of other similar homes in the area.
Area and communications
If the neighborhood where the house is located is in high demand and has little supply (the urban centers of cities as large as Madrid or Barcelona), if it is well connected or if it has many services are some of the things that can make the price of the rent is increased and that, therefore, a greater profitability is achieved when renting the property.
In general, two- or three-bedroom chalets, apartments, lofts, penthouses or flats tend to be much more in demand. The reason? They have extra elements such as terrace, garden or pool, highly demanded, especially after the COVID-19 crisis.
It is best to check the average price of the area, according to the square meters of the property and its characteristics. It’s a good way to avoid getting your fingers caught and being eligible for multiple tenants.
Expenses in the purchase of a house
Keep in mind that when buying a home, not only the price agreed with the seller counts. You must also take into consideration other expenses, such as VAT (if it is a new construction home) and other taxes, such as Documented Legal Acts, those of the sale and purchase transaction (registration fees, notary’s office or opening of credit mortgage, if necessary). On the other hand, it is necessary to add the corresponding and obligatory expenses of Real Estate Tax (IBI), community and insurance.
Will you have to reform the house before renting it? Do you plan to furnish it, do some finishes, paint the rooms? Everything you have to do, in addition to the purchase, must be considered as an expense.
Risks of buying to rent
Finally, we must tell you that when buying to rent you have to learn to minimize risks, because it is essential to have peace of mind. Bear in mind, of course, that several things can happen, such as, for example, that the house is for long periods without leasing, that the tenant does not pay or that it causes damage to the property. Remember that for these cases there are insurance for non-payment of rent with different accessories, such as repairs in case of damage or payment of the fee if any mishap occurs.