FirstRung.com gives a list of 10 tips for property investors in the actual slow market.

1) Research the curve - the concept of a property market cycle existing is not myth it’s a fact and is generally accepted to be based on a price-income relationship. Check the recent historical price data for properties in the area of the country you’re considering purchasing in and try to determine the overall feel in the market for prices currently.

Prices slowly decline in certain area of Spain however prices are still increasing in the country (10% this year , 15 % in 2005)

2) Get ahead of the curve - as a basic rule of thumb, professional real estate property investors seek to buy ahead of the curve. If a market is rising they will try and target up and coming areas, areas that are close to locations that have peaked, areas close to locations experiencing redevelopment or investment. These areas will most likely become ‘the next big thing’ and those who by in before the trend will stand to make the most gains.

As far as Spain is concerned I except the untapped Extremadura region to be the next big thing inland, great green area, cheap prices and 1 or 2 regional airport. On the sea front there is hope of the undiscovered , underated Costa del Luz.

3) Know your market - who are you buying property for? Are you buying to let to young executives, purchasing for renovation to resell to a family market or purchasing jet to let real estate for short term rental to holiday makers? Think about your market before you make a purchase.

Make sense !

4) Think further afield - there are emerging real estate property markets around the world where countries’ economies are going from strength to strength, where a growing tourism sector is pushing up demand or where constitutional legislation has been or is about to be changed to allow for foreign freehold ownership of property for example.

Romania, Bulgaria …I have been to Romania in Bucharest, life is cheap (could go to restaurant every days), but weather and architecture remind me of my hometown of Brussels, not a place I want to live ok for a week end, I had rather invest in Portugal, Spain or the some island in the Caribbean.

5) Purchase price - set yourself a budget that will realistically allow you to purchase what you’re looking for and profit from that purchase either through capital gains or rental yield.

Capital gains seems to be the better root in Spain.

6) Entry costs - research fees, charges and all expenses you will incur when you buy your property

Yep, secure 12 % - 13 % on the property price, this will pay the many fees you will go through. lawyers, notary, legal fees, etc ….

7) Capital growth potential - what factors point to the potential profitability of your real estate property investment? If you’re looking overseas at an emerging market, which economic or social indicators exist to suggest that property prices will increase?

Barcelona seems to really be saturated not a good place to invest, must I see some growth opportunity inland in Extremadura even in Madrid and certainly in the finest part of Andalucia.

8) Exit costs - if you will incur substantial capital gains taxation liability if you sell your property investment for profit, will that render the investment profitless?

The current Spanish capital gains tax was recently adjusted to 18 % of resident and non-resident, some eastern European countries don’t have such a tax.

9) Profit margins - what levels of capital growth can you realistically gain on your property investment or how much rental income can you generate?

Some areas attractiveness grow faster than other, it is very difficult to tell, things are quiet in Cacéres (Extremadura) but in a span of few month this city can become the next big thing, there are potential there.

10) Think long term - unless you’re buying property off plan and intending to flip it for resale and profit before completion you should view real estate investment as a long term investment.

Logic !

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