Buying a home to rent is an increasingly affordable investment option for people with economic and savings capacity. It is not new at all, since it has existed as a real estate practice for centuries, but it has always had moments of boom and decline. The short or medium economic cycles, to which the real estate market is usually quite sensitive, have normally marked the tangible benefits or profitability that could be expected from these investments.
That is why it is important to start by saying that, if your option is to buy a home to rent, you must take into account the general economic context and the real estate context in particular before making a decision. It is an investment for the future that you must analyze with the rigor it deserves.
At present, the general opinion agrees that we are going through an upward trend in the sale of homes. After the harsh crisis that the sector went through until the middle of the last decade, the market has been showing signs of recovery in the first stage, and of constant strengthening in recent years. The post-pandemic period, in fact, has been marked by a peak of activity, which has benefited both supply players in the sector (investors, developers, builders, specialized funds, etc.) and demand. The latter has been found with new-build homes of all kinds, adapted to new tastes, with greater demands on functionality, materials, advances in comfort, and sustainability.
Coincidentally, the value of money that operates on this side of the demand has been linked in recent decades to the Erabor, the interest rate set by the ECB for mortgage loans. And it has been at historical lows for almost a decade and is expected to continue like this in the short term. And, in the event that it is modified, it will be minimally and in small percentage increases, according to most experts.
Yes, this is a good time to buy homes to rent
That’s right, if to this state of things we add that the problems in the labor market in Spain have transferred a large part of the demand for housing to renting and that, in addition, a change in trend can be seen in the new generations to not consider buying a home among your priorities for the future, the answer is yes.
This is a good time to buy homes to rent as an investment for the future if your financial support allows it and you are looking for investments with good returns. In fact, statistics indicate that the return on investment (rate of return) in this operation quadruples the yield offered, for example, by a 10-year State Bond.
Initial advice on buying homes to rent
Once the main doubt about whether or not to carry out this type of real estate investment has been cleared up and if you are already choosing the type of home you want to buy, the next thing you should do is find out the average rental prices in your province. Take a good look at the prices of other homes in the same area, with a similar typology (available square meters, number of rooms) and services (it is not the same as having common areas, swimming pool, security, etc.). Also locate the tertiary and public uses in your environment, if there are supermarkets, shopping centers, hospitals, recreation areas, and all those advantages that can give a plus to the home you intend to buy to rent.
With this information, you will have already made an idea of how much you can expect to charge for your monthly rent, and also what type of people your property may be interested in.
Choose your home to rent: put yourself in the hands of professionals
With this data in hand, you can have a much clearer idea of the whole situation and start taking the steps of the process from the beginning. First of all, go to the offer aggregators in the area, promoters, builders, and real estate agents, and visit them or check their web pages.
Once you have chosen the property you want to buy to rent, do your accounts in detail, and consult your manager about the real return you want to obtain per year for the duration of the mortgage period on it (and thus you will be able to anticipate how many years you will have to contract it).
Make a good study of how much of your current savings you can contribute to the new mortgage and what are the general expenses of the entire operation. And when you have it clear and you have confirmed that it is a good investment for the future for you, go ahead!