Buying a Property in Portugal
As Portugal’s version of Phil and Kirsty, life can be sometimes very difficult for the seasoned Realtor. Not only does the job entail suffering the constant sunshine, 30 degree plus temperatures, stunning beaches, beautifully built property and unusually healthy lunches, but also the enthusiasm of the over eager client can cause consternation and concern. Enthusiasm is great and is generally encouraged in the client, but miss-guided over-enthusiasm can result in them making a disastrous purchase.
The objective of the purchase is vital information for the Realtor…..sounds obvious, but as keen watchers of Location, Location, Location will know, clients often don’t know the objective of their purchase themselves, which intern has the Realtor going round in circles!!
With the holiday home there are many contributing factors that affect the objective:-
Budget – how much do they want to spend. Again this sounds obvious……we all want a detached sea front 4 bedroom villa with its own pool, shops bars and restaurants within walking distance, next to the Marina and overlooking The Royal Courses 7th fairway for 190,000€. Most of us realise this is impossible unless it’s in Egypt or Bulgaria and the Course and Marina haven’t been built yet!
Have they cash or do they need a mortgage? If yes to the mortgage how much a month can they afford to pay each month? What cash deposit do they have (in the current climate this needs to be near 40%)? How old are they, what is their income, existing out-goings and financial commitments? Then do they need to cover this monthly cost by renting out, this in turn affects the location and type of property. Running costs, buying fees, condominium or maintenance fees, council tax (IMI),…all need to be taken into account when setting the budget,
Next is location, if rental is important that affects the type and location of the property dramatically. If the property is solely for them, do they want to be in the thick of it, or want peace and quiet. Is the distance from the airport, golf, local facilities and its views important?
Investment – Is the property an investment? Is it for capital gain or rental yield….or both?
Rental yields rely on low purchase cost and high tenancy, this in turn affects the location, and the owners personal usage. People with young children find renting out difficult as they wish to use their holiday home themselves in peak rental periods!!
Often the best rental properties are not the nicest as it is better to buy the cheapest property on the best resort. This property is usually the worst position, but the rental income is the same as the most expensive property on the same resort. Often clients emotion pushes them to spend an extra 40 to 50,000€ for the pool or golf view when the maths and commercial reality suggests saving and going for the less attractive option looking over the car park!!