What is the best investment instrument in Spain today? The Spanish real estate market has positioned itself as a very attractive destination for investors looking for solid opportunities to protect their wealth abroad. This has happened because hundreds of investors have seen first-hand the wonders of this European country, such as its diverse and constantly developing economy, as well as its great tourist attraction and its sustained real estate growth over time. From the comfort and convenience of the Turnkey model to the versatility and diversification of Investment Funds, and the excitement and challenges of House Flipping; discover below 3 ways to invest in Real Estate in Spain from Mexico.
1. Turnkey
Over the last few years, the Turnkey investment model has gained popularity in the Spanish real estate market as it provides international investors with an efficient way to enter into cross border real estate investment thanks to a focus on comfort and convenience by handling the complete management of the property, from tenant search to remote maintenance.
In the context of the Spanish real estate market, the turnkey model involves the acquisition of ready-to-rent properties, which significantly facilitates the investment process for those seeking to generate passive income through real estate leasing. A major attraction for Latin American investors is the diversification achieved by accessing international properties, thus protecting against inflation. With a variety of options available, from apartments to villas, and the backing of professional advice, the turnkey model allows investors to efficiently maximize their returns in the Spanish real estate market, although thorough research is essential to mitigate risks.
Advantages of the Turnkey investment model in Spain:
- Ease and convenience: The main advantage of the turnkey model lies in its simplicity and convenience. International investors, especially those residing outside Spain, can take advantage of this strategy to acquire properties without the need to actively manage the acquisition or renovation process.
- Risk reduction: By purchasing properties that are already fully developed and ready to rent, investors can significantly reduce the risks associated with investing in real estate, such as construction delays or unforeseen renovation costs.
- Passive income generation: The ready-to-rent nature of the “turnkey” model allows investors to begin generating passive income immediately through the leasing of acquired properties. This provides a stable source of income and a short-term return on investment.
- Portfolio diversification: Investing in real estate through the “turnkey” model in Spain offers investors the opportunity to diversify their investment portfolios, either domestically or internationally, which can help mitigate risk and maximize long-term returns.
Investment funds
Real estate investment funds offer a lucrative opportunity for Latin American investors interested in penetrating and profiting from the Spanish real estate market. Through asset diversification with investments in property and real estate assets, investors have the opportunity to allocate their capital across a variety of strategies, reducing the risk associated with investing in a single asset. In addition, professional property management by experienced real estate teams ensures an efficient and profitable investment.
Another significant advantage is affordability: real estate investment trusts allow investors to enter the real estate market with relatively low initial capital, compared to buying property outright. This makes it an attractive option for those looking to gain exposure to the Spanish real estate market without committing large sums of money.
In addition, this type of strategy offers liquidity, as investors can buy or sell fund shares at any time, providing flexibility in the management of their investments. There are currently 2 main types of real estate investment funds in Spain:
- Direct real estate funds: They build their portfolio with different types of real estate properties, such as housing, offices, shopping centers, etc.
- Indirect real estate funds: They compose their portfolio with holdings in other direct and indirect real estate funds, SOCIMIs, REITs, among others.
What are the advantages of investing in Real Estate Funds in Spain?
- Market access: The funds allow investors to access the real estate market on a large scale and in different urban areas.
- Simplicity of contracting: Investing in funds is simple and can be done through the fund manager or a marketing agent.
- Transparency: Funds are regulated products that provide regular information on the value of assets and other relevant aspects.
- Leverage economies of scale: Investment costs are diluted across the entire portfolio of assets, which can improve investment performance.
- Tax benefits: Transfers can be made between funds without taxation, and returns are declared at the time of redemption of the units.
3. House Flipping
House flipping, or “real estate flipping”, or simply “flipping” is an investment modality that consists of acquiring properties at low prices, renovating them and selling them at a higher price in a relatively short period of time. This strategy offers the opportunity for quick profits, but it also carries certain risks and considerations that must be taken into account. This process usually involves 3 key steps to achieve returns on investment:
- Property Acquisition: Investors look for opportunities in the real estate market to acquire properties that are below their actual value. This may be due to a variety of reasons, such as the owner’s urgent need to sell or the state of deterioration of the property.
- Renovation and Improvements: Once the property is acquired, the necessary improvements are made to increase its market value. This may include remodeling work, structural repairs, facility upgrades and energy efficiency improvements, among others.
- Sale: Once the renovations are completed, the property is offered for sale on the market. The objective is to find a buyer willing to pay a price higher than the acquisition cost plus renovation costs. The key to success in house flipping is to sell the property as quickly as possible to maximize profits.
Flipping has the potential to be a lucrative investment if carried out properly, offering a return of up to 20% on sales value, although it carries certain financial and time management risks that must be considered. These risks include the possibility of renovation costs exceeding expectations and the property not selling at the expected price, as well as the need for efficient time management to avoid additional costs.
However, it is highly recommended not to wait for great offers or for prices to fall below average to start getting returns, the ideal would be to invest in apartments that require urgent reforms and whose location is too attractive for both locals and foreigners who wish to live near the best areas in Spain.
A very important point for investors who want to venture into flipping in Spain, is that the country is currently undergoing a reform that requires the modernization of homes more than 20 years old, according to the new energy efficiency standards from Europe. This leads to a need for investment in order to
Despite the risks, this type of investment offers an exciting opportunity for short-term gains in the Spanish real estate market, provided proper due diligence is performed.
4. Bonus: Investment in hotel rooms in Madrid
Why did this type of real estate investment not enter the main top? The reality is that below you are going to learn about an opportunity that is not so common, but when it presents itself, it is not advisable to leave it aside. In the latest Investment Sessions by Nolab, and in exclusive collaboration with Hotel101, we present one of the best opportunities to invest in Spain without leaving Mexico.
This is the brand new Hotel101 in Madrid, Spain. This project will be strategically located near the Adolfo Suárez Madrid-Barajas airport, the city center and the Valdebebas station. However, one of the main attractions will be its incredible view of the brand new Formula 1 circuit in Madrid, something very similar to what happens with the Monaco circuit, where apartment owners can enjoy the race from the comfort of their home.
Find out all about this incredible investment opportunity in the article dedicated to this topic: Investment Sessions By Nolab: Investing in Madrid from Mexico with Hotel101.
At Nolab we understand the main concerns and goals for Latin American investors seeking to invest their wealth in safe and attractive opportunities. Contact us and find out how to get started without leaving your country.
