Investing in a home to rent out can be a fantastic way to earn some extra income. The increase in tenant demand will ensure you get an immediate economic return. But finding the ideal candidate is not an easy process, especially when it comes to making sure that they will be a good payer. What if you could buy a house with a rental contract in force and, in this way, not worry? If your intention is clearly an investor and you do not plan to live in that house for a long period of time, you may be interested, but you will have to take into account several factors.
If your intention is to rent, when you buy a rented home you will have part of the work already done. One of the advantages is that, in principle, the tenant will already have some references that the seller of the property will provide you. The important thing is to make sure that this person is in good compliance with their monthly obligations, both rent and utilities, in addition to having demonstrated exemplary behavior towards the community of owners.
The tenant has his obligations, as well as his rights. One of them is that you, as the owner, when buying the property, must respect the rental contract in force. In this sense, you will be obliged to comply with the stipulated deadline and you will not be able to throw him out happily. The contract could be extended up to five years if you buy as an individual. Another measure that you will not be able to adopt is to raise the rent by more than 3% due to the regulations currently in force.
As we said before, buying an already rented house will save you from following the selection and processing process, which can be exhausting. You will also avoid the journeys to show the property, so the profitability of the property is assured from day one. As the property is already occupied, you will not have to worry about renovations or updates. You will simply have to be aware of specific incidents such as a breakdown or the breakage of an appliance.
An apparently minor detail is that of the review of the inventory of the house that appears in the contract. This will avoid surprises by discovering what you will have to face in the event that there are things of great value. Generally, the most valuable is usually insured, but it is usually a policy for the contents that will depend on the tenant. The rest of the furniture and appliances included in the inventory should be checked to see what condition they are in and thus check that everything is working correctly.
This is certainly a very subjective assessment, but we can take a look at the data. According to the quarterly rental price report prepared by pisos.com, the average rental price in Spain was 11.44 euros per square meter in March, rising by 1.06% in the last month and by 7.82% compared to March 2023. Monthly payments are far from containing their rise for the time being, which represents an attractive investment option. In a total of six provincial capitals, gross profitability is above 7%.
However, a house that is already generating returns is probably more expensive than if you decide to buy an empty home in which, in addition to being part of the process from the beginning, you have to do some renovations, but it can also be a long-term investment. Buying it without a tenant will allow you to update the house and the price, and thus obtain a rent that suits your wishes. You will be able to search for a tenant with a certain profile and with whom you feel comfortable.
In response to the question of whether it is a good idea to invest in this way, the answer is yes, as long as you want to obtain an immediate economic return. Depending on the area and the offer for sale, it may be more worthwhile for you to buy, renovate and rent, starting from scratch. You have to make the decision based on your time and your budget.
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