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Making money from your property in Spain

There's just one thing better than owning a holiday home in

Spain - and that's making some money from it too. .

The buy-to-let market may be struggling in the UK, but in Spain,

given a good property in the right kind of area, the demand for

holiday rental properties is still high. So any income generated

from buy-to-let is a bonus beyond the capital appreciation you

can expect from your investment, which is currently predicted to

be about 10% on average in 2005.

Spain is still the favourite place for investors hoping to

combine pleasure and profit by buying a property that they can

then rent out. And the Costa del Sol and Costa Blanca are the

places that attract the greatest number of holidaymakers looking

to rent a property in Spain.

Some buyers invest purely for this purpose, perhaps as an

alternative to investing in a pension fund, but with no

intention of using the property themselves at present. Other

buyers find it a useful way of financing the purchase and

ongoing costs by renting out their house when they are not

staying in it.

Despite what you may be told about 'year round rental

potential', be realistic about how much you can rent out your

property. The average period that a Spanish property is let out

is 10 weeks a year. This, of course, will be far higher for a

well-maintained and desirable property in a popular holiday

area, and less for something in need of a repaint and a long way

from the beach, amenities and transport.

Though bear in mind that in the most popular resorts, such as

Marbella, the competition for rental properties is immense - and

there may be little to distinguish one two-bed, two-bath

apartment on a beachside complex from the next.

When buying, be clear whether you are buying solely for

investment, or partly for your own use. This will clearly affect

what kind of property you buy - and if buying for both purposes,

you may struggle to work out whether to compromise on the

aesthetic or financial element to make the most of your

purchase.

If your taste naturally sees you roaming into the wilderness of

inland Andalucia, be realistic about just how many holidaymakers

will want to stay somewhere that remote and appreciate the same

rural charms as you.

For pure investment, a golf property on the Costa del Sol is a

pretty safe bet, and Marbella - within 45 minutes of Malaga

airport, and with numerous courses within a 40 minute drive - is

a good option. A similar property on the Costa Blanca, near

Alicante, will cost less and capital appreciation will be less,

but there is still a huge golf holiday market to tap into there.

Another important decision is whether you intend to let out your

property for long periods (eg. 6-12 months) or on a short-term

basis for holidaymakers. This will be determined by how long you

want to stay there yourself - and how much hassle you can

handle.

Holiday lets may bring in tempting income - £600 a week is

typical for a two-bed apartment in Marbella in high season. But

you may only be able to rent it out for July and August, yet

still have to pay the running costs, taxes etc. for the rest of

the year. And you'd be amazed how much constant cleaning and

maintenance a property requires when let out on this basis.

Long-term lets provide more security with a regular source of

income, but the rate is lower (that same flat which rents for

£600 a week in summer would bring in about the same amount per

month on a long-term basis) and you won't be able to use the

property yourself.

To boost the rentability of your property, especially for short

lets, the following are desirable:

* Proximity to the sea, restaurants and bars. * Proximity to

supermarkets and other shops. * A swimming pool, either

exclusive to the property or a shared pool. * An area where you

can walk safely at night * A barbecue (especially gas which is

easier for the client to keep clean). * A plentiful supply of

fresh linen and towels. * A washing machine and an area where

clothes can be dried. * Satellite/cable T.V.

Management of your property:

Using 'word of mouth' is the simplest and easiest way to rent

out your property. Let friends know that you have a property

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abroad that you would like to rent and ask them to tell their

friends about it. Having people you know in your holiday home

may make you feel more comfortable about others staying there.

You may consider handing your property over to a holiday

company. This may make you good money but be careful to check

out their fees before you sign any contracts. And remember, you

can't build a clientele if you have no details of who is staying

there.

There are numerous companies in Spain who will manage your

property for you. The service provided by these agencies varies

enormously, so make sure you have thoroughly checked what their

service includes. For a small established company, expect to pay

between 25 - 40% of your letting for their services and £300 per

annum for additional maintenance. Many estate agents offer a

property management service, but always deal with people you can

trust.

Contracts:

Ensure that the terms of your contract and the quality of your

tenants meet your requirements. If you deal with a holiday

rental company, read the contract very carefully before you

sign. Make sure that any damage to your property is made good

and the cost does not fall upon you. If you are supplying the

tenants then any damage will be down to you, so make sure you

receive a deposit.

Ensure any rental business is legally registered and that you

pay the appropriate taxes and insurance. When you provide linens

and other services you qualify as a business and should legally

declare a property as tourist letting accommodation. This may

seem an unnecessary burden, but remember that if anything goes

wrong you will have a legal footing.

About the author:

Zoe Dare Hall is the Communiations Manager for Lighthouse Spain,

www.lighthouse-spain.com, a unique service aimed at taking the

risk and stress out of buying a property in Spain.

Zoe regularly writes for the major UK newspapers about Spain and

the Spanish property market.