In my previous article we looked at the different points to be taken into account if you were considering buying a holiday home as an investment.
One important aspect that we analysed was to know the assessed value of your future home before you buy.
The second point was engaging an experienced real estate agent. etc
We will continue with a few more advice some of them might sound obvious but you will be surprised of the number of people who have asked us to rehabilitate a property that they just bought and when the work is finished they decided that they didn’t like the neighbourhood or that they preferred to travel each year to a different place rather than be tied down to one particular place.
Check the condition of the property.
If the house, you want to buy is a new property, we must make sure everything is legal, ensure that the materials are those specified in the sales literature ... In short, control everything so that you don`t encounter unpleasant surprises later.
If the decision is to buy a resale villa or apartment, the best advice would be to engage an architect to survey the property to detect any possible structural or other type of building failure that may affect the final price of the property. Do not leave anything to chance!
Do your sums and adjust the price
Do not buy on high season if you can help it, as prices rise before and during the summer. You have to calculate whether the cost of the house is acceptable to your own economic possibilities. It's simple! You just have to quadrupling your annual gross income. No individual or family should allocate more income of over four years to buy a property. Obviously there are other expenses such as taxes, home insurance ..., expenses sometimes underestimated, but should always be considered in advance.
If the property has any defects try to negotiate a lower price to adjust the over costs that you will have to incur in the future to sort out those problems.
Try to buy in a well located area that is not too well known or visited.
If a house is purchased to relax contemplating the countryside or the beach you will be well advised to visit the place during the top season and during the weekends. A peaceful romantic place during off season can be like if all hell has broken loose at 2.00am on Saturday morning.
Or the area can be driven to easily and peacefully during off season but again on middle of August is a perpetual traffic jam. In addition, it should not be too isolated, with easy access and, if possible, not too far to the amenities (doctors, supermarkets, etc.).
Before buying it is also advisable to know if there are neighbours during the low season. If so, it is good news, because it is much safer and it is inhabited throughout the year and not just a "ghost neighbourhood" that only fills in the summer months.
Know your maintenance costs
Acquiring a second home means knowing all other expenses which are related thereto and that should be examined before the purchase is made. You have to pay each month community fees, energy supplies (electricity, water, gas, etc.), costs of conservation pool or garden, property tax, other taxes ... And all of that just to use a few weeks a year!
Try to obtain an extra income if the property is to remain empty most of the year.
To purchase a house in an area with a good beach guarantees its value and also that you can rent it if one day you decide it is profitable.
If the property is purchased with the idea of just using it a few weeks a year, you may consider renting it the rest of the summer or year; obviously you should pay close attention to the amenities around it. To make it comfortable to potential tenants must have an accessible parking, next to supermarkets, close effective medical service etc.
Taxation on the second property
Since this year the fact of having a second home in Spain could mean, paying additional tax equivalent to 2% of the declared cadastral value of the property, or 1.1% if the assessed value has been revised after 1st of January 1994. If the house has no rateable value, the charges will generally be 1.1% of 50% of the purchase price of the property. In this field I always recommend to obtain advice from a tax expert.