Buy to let Investment Property in Portugal
A phrase many British property buyers will be all too familiar with “Buy to Let”. A craze that swept through the UK and Ireland years ago and stuck fast remaining one of the most popular means of investment throughout Britain.
In simple terms it’s the idea of buying a home and renting it out at a profit, or to cover at a minimum the running expenses. A form of pension for those who lost faith in more traditional means of saving for retirement, a way of having your cake and eating it as well. After all (at least for overseas property buyers) a huge draw was being able to use the property for holidays whenever it wasn’t rented.
Does Buy to Let work in Portugal though?
This is a good question and as much as we’d love to say yes of course it does, it really hinges on the properties location and crucially the price you pay. This is not traditionally a long term rental market so there are fluctuations in the rental year, traditionally summer rentals will account for at least 70% of your annual income, miss this season (June – August) and you will almost certainly have to put your hands in your pockets to meet the running costs.
For most owners of property in key tourist locations in the Algarve covering the annual costs of a property is very achievable. Anyone buying over since 2009 until now, should almost certainly cover the costs easily. Prices have obviously dropped and rentals have kept at roughly the same level making profit a realistic target for serious Buy to Let investors.
Who should I rent my property with, commissions are so high?
Many owners focus far too much on what their agents make, frankly you should only be interested in what you make, if you make what you need to then the agents done their job. Most good reputable companies will charge around 20% of the rental fee as commission on top of this you will also have cleaning laundry and incidental costs to pay for each renter.
We always recommend that clients who either really need to make rental work for them, or those with multiple properties advertise their homes themselves as well. The best website to put your property on if you wish to handle client bookings personally, in our opinion anyway, is OwnersDirect. Of course its worth noting that you will NOT be able to get top rates whilst advertising here, most people will look to haggle the price down and will be looking for a good deal for their holiday so its a chance to test your selling skills if nothing else!
So do they work or not?
Right now its a resounding YES, prices are substantially lower for prime located properties so its much easier to get all the costs of a property covered with rental. This will of course becoming harder during the next few years as prices rise but for now it’s a great time to expand a property investment portfolio with a safe and secure overseas property investment.
If you’d like to speak to us about an investment property in Portugal Algarve drop us a line here.