Madrid is not only one of the best places to live in Spain, but it is also a city of choice among expats. It has the hustle and bustle of a big city together with the charm of an old town. It also has a high standard of living at a price that most people can afford. A map of Madrid neighborhoods will help you orientate.

You’ll find that Madrid is a fun and lively city that is rich in art and culture, has great weather, and a busy nightlife. It also has probably the best healthcare system in Spain, a good transport system, and lots of job chances at a host of international companies. But how do you pick which suburbs of Madrid are the best?  If you look at a Madrid neighborhoods map, you will see that most of the Madrid property for sale is centralized.  This can make the purchase of Madrid real estate difficult, and it is worth contacting a professional relocation expert.

The suburbs of Madrid.

In total, Madrid has 21 districts and over 100 neighborhoods, and that makes picking the best difficult.  Madrid offers something for everyone, but I have picked what I think are the best Madrid suburbs for families. Let’s start right in the very center.

Plaza de la Puerta del Sol.  Also known as plain old Sol, this very central area is situated right at the center of the city, and is anything but plain. Sol is bordered by several other trendy suburbs but remains the top area in the city. If you look at a map of Madrid neighborhoods, you will see that Sol is the area with everything happening. Sol is a busy area with lots of Tapas bars, pavement cafes, and shopping streets for people on foot. Along Gran Vía, there are museums, theatres, and beautiful buildings. Plaza Mayor, Madrid’s main square, and the busy Mercado de San Miguel, which has groceries, restaurants, and wine bars, are also there. Of course, Sol is also almost impossible to buy property in, and renting is hugely expensive. There are lots of long term rentals Madrid here.

Malasaña. Looking at Madrid Spain maps, this is located to the north-east of Sol, this is a great area for people who want to live in a young, hip, artistic neighborhood but where the rent is cheaper than in Sol. Malasaña is great for people who like to go out, shop in retro or unique stores, and have easy access to bars and restaurants. Madrid property for sale here goes quickly. You can sit there with a cup of coffee and watch the world go by. Malasaña is considered to be the best area to stay in Madrid for families because of its easy-going nature.

Chueca. This highly vibrant part of the city is regarded as one of the best places to live in Madrid for young adults. Chueca is renowned for its LGBQ+ bars and clubs and is a friendly, inclusive environment, where the rent is fairly reasonable, and there is much to do. Chueca is a fun and exciting place to be. During the day, you can go to restaurants and shops to eat and shop. At night, the whole neighbourhood changes. Every corner is a party, and you’ll get to go to many madrid gay bars and clubs. Cheuca is also happy to host the well-known gay pride celebration Día del Orgullo de Gays in the summer. Short term rentals Madrid are common here.

La Latina. Still very central but exhibiting much more in terms of traditional architecture, La Latina is the seat of culture in Madrid. Even though La Latina is in the city’s central area on Madrid Spain maps, it feels very different from the rest of the city. La Latina is the oldest part of Madrid, so it has a lot of old-world beauty. Some of the city’s oldest buildings, cobblestone streets, and narrow alleys full of bars and restaurants are all in this area. On a Sunday morning, after going to El Rastro, Madrid’s oldest and biggest flea market, people in La Latina usually go on a food and drinks crawl along Cava Baja. La Latina is one of the most social suburbs of Madrid.

Chamerí.  If you are looking to live and work in the city, then Chamerí is a great mix of reasonable rent, good food and bars, and a mix of laid-back people. It features amongst the top of Madrid neighborhoods map. Chamebrí is an area with a lot of different aspects to it. It’s mostly traditional, and it has a mix of expensive and cheap neighborhoods, unlike the nearby expensive area of Salamanca. This private neighborhood is also pretty much free of tourists, and it is quiet, cute, and cozy, making it an excellent place to go home to.

Salamanca. The throbbing shopping and business heart of map of Madrid neighborhoods, barrio de Salamanca is probably the poshest area of the city and the most expensive to rent in. Many expats who move to Madrid for work choose Salamanca. because it is genuine, very safe, and well connected to the city center. This is Madrid’s business district, full of bars, restaurants, art, and architecture, and because the quality of the homes and streets is much better than in the city center.

Madrid is a city of many different, well-defined, suburbs that each have much to offer the tourist or those looking to rent. The Madrid neighborhoods map will help you understand the area. It is a place where you can work hard, play hard, and eat and drink well, but in many central areas, that will cost you.

If you are unsure about property for sale in Madrid, then contact Moving2Madrid who can help you with all the day-to-day things that need completing for your Madrid property for sale.

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In May 2022 the Center’s sale prices average 5,149€ per square meter while rent prices average 18.5€ per square meter per month. A 4.3% gross rental yield per year. In Tetuan sale prices average 3,795€ per square meter and rent prices average 15.5€ per square meter per month. A 4.9% gross rental yield per year. In Puente de Vallecas sale prices average 1,992€ per square meter and rent prices average 12.5€ per square meter per month. A 7.5% gross rental yield per year.

While cheaper properties tend to provide a higher gross yield, it does not tell the full story. You should treat your property investment as a business, gross revenue is only one part of the picture. You need to take other factor into consideration such as:

• Acquisition and operation costs
• Market cycle and trends
• Property management

We used idealista report to gather the price data for this article.

Acquisition and operation cost

Acquisition cost 

As you purchase a property you should expect a series of acquisition costs on top of the purchase price. You can find the details on these in our article The real cost of buying an apartment in Madrid.

While taxes are percentage based, notaries, accountants, deeds managers and in some cases lawyers will apply a fixed rate. If like most of our clients you live abroad, travel costs will enter into the equation as well. They may seem small in comparison to the purchase price, most notaries will charge you 800€ for the purchase. However, they quickly add up, the lower the purchase price, the more impactful they will be.

Operation cost

Once your purchase is complete and you start renting the apartment other expenses need to be accounted for. Whether you buy a 60 square meter apartment in Tetuan or in the Center, the cost is not going to be lower because the price of the apartment is cheaper. Repairing the building roof, changing the boiler or  painting the apartment will be the same. For a 60 square meter apartment in Madrid, building community averages 60€ per month. The apartment maintenance cost will average 50€ per month. Often time to community cost will be increased to take care of unforeseen expenses like repairing the roof.

Another thing to consider would be refurbishment costs. Fully refurbishing a 60 square meter apartment in Madrid would cost around 50.000€ regardless of the neighborhood it is located in. To know more about refurbishment in Madrid please refer to our article: How much does property refurbishment cost in Madrid?

Market cycle and trend

The future is never clear

You can make a good guess at it but there is no way to know where the market will be in five years from now. However, expecting prices to remain where they are is not very realistic either. Both rent and sale prices are going up and down according to the economic conditions we are in. For instance, if unemployment increases it will have a negative effect on prices.

One of the best tools we have to get an idea of what may happen in the future is to look at what happened in the past. Based on that, one observation you can make is that Madrid districts with higher prices per square meter are also more stable. They tend to fall later and rise sooner. It makes sense, people who live in more consolidated neighborhoods tend to be wealthier whether they own or rent a property there. They are less likely to be affected by an economic downturn and benefit more from a growing economy.

What happened in the past

If you bought a property in Salamanca in November 2007 the worst case scenario would have been to sell it in August 2013 at a 18.6% discount. In the Center, the worst case scenario would have been to sell it in November 2013 at a 26.5% discount. In Tetuan, the worst case scenario would have been to sell it in March 2015 at a 33.8% discount.

Your rental return too would have been affected by these up and down. In May 2009 rental prices averaged 16.9€, 16€, and 14.6€ per square meter per month in Salamanca, Center, and Tetuan respectively. Five years later in May 2014, the average rent price per square meter per month was 13.6€ in Salamanca, 13.4€ in Center, and 11.2€ in Tetuan. 

In May 2009 you were expecting a yearly gross rental yield of 4.1% in Salamanca, 4.6% in the Center, and 5% in Tetuan. In reality, after 13 years in May 2022 your gross rental yield would have been 3.22%, 3.70%, and 3.73% per year in Salamanca, Center, and Tetuan respectively. By then the price of your property would have increased by 33.3% in Salamanca, 23.7% in the center, and 9.5% in Tetuan. Putting rental return and capital appreciation together your total gross yield would have been 6.89%, 6.39%, and 4.87% per year in Salamanca, Center, and Tetuan respectively.

Book a free consultation

Management

At the end of the day prices are higher in the Center and in Salamanca because people find it more attractive to live in these neighborhoods. You will find nicer restaurants, more cultural centers, and shopping areas at your doorstep as well as better access to transport. Higher prices will attract tenants with higher purchasing power who are less likely to default on their rent.

You will have more options when looking for a company to manage your apartment. They will be more motivated to find you a tenant and help you out when an incident comes since their comision is based on the rental price. It will also be easier to switch between different types of rentals: yearly, monthly, or daily to optimize return.

Conclusion

While at first glance, a cheaper property seems to provide a higher return, we have seen throughout this article that to make an educated decision you need to take other factors into account. What are the costs involved? What are the strengths and weaknesses of the asset? How easy will it be to find a tenant? Generally speaking higher return comes at the expense of higher risk. 

At Moving2Madrid we want to make it as easy for foreign individuals to invest in Madrid as it is for locals and institutional investors alike. If you need help making the most of your budget in Madrid, book a free consultation with us now.

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Spain has arguably the best Golden Visa program in Europe. Contrary to some rumors, post Russia’s invasion of Ukraine, the program is still going strong. As long as you are not Russia,  you can get a Spanish residency permit (this is the correct bureaucratic terminology for Spain’s golden visa) if you purchase property in Spain. This will allow you to live in Europe, as long as it is in the Schengen Area. There are two challenges: (1) you must invest at least 500,000€ and (2) the paperwork. Keep reading to learn the details.

Buy a property valued more than 500,000.00€ and take advantage of Spain’s Golden Visa

In 2013 Spain passed a law that gives residency permits to non-EU citizens in exchange for a property investment of 500,000€ or more. They instigated the program to attract foreign investment and create jobs. This will stimulate the economy and reduce public debt.

We have many clients that have taken advantage of Spain’s Golden Visa. In this article we address their most frequently asked questions. We explain the difference between a visa and a residence permit, details about the type of property purchases that qualify, timing and more.

Q: Is Spain’s Golden Visa program at risk of getting cancelled, post Russia’s invasion of Ukraine?

A: No. The program has been too successful for this to even be on the table.

Q:Have there been any changes to Spain’s Golden Visa program in 2022?

A: Yes. If you are a Russian citizen, you can no longer participate in the program. Similar decisions have also been taken by authorities in Malta, Portugal, the United Kingdom and Greece due to Russia’s invasion of Ukraine. As part of international economic sanctions against Russia, the EU required the bloc’s countries to refuse visa applications of Russian diplomatic and political persons. Spain made the decision to extend that to all Russian citizens.

Before the sanctions, Russians were large property buyers in Spain. According to data provided by the Spanish Registrar, in 2021 Russians purchased 159 properties in Spain with price tags over 500,000€. This was more than purchased by American and Chinese buyers.

Q: Can I apply for Spain’s Golden Visa with more than one property if each property is less than 500,000€?

A: Yes. You can use more than one property to qualify for Spain’s Golden Visa as long as the amount invested is equal to or greater than 500,000€. However, we have found that purchasing a one property generally helps you optimize your Golden Visa property purchase.

Q: Is there a certain period in which the purchases must take place? Suppose I buy one property now and another, say, a year later?

A: Currently there are no requirements on the timing of your purchases. The only potential problem would be if the Spanish Government modified the law. Please note that this type of thing has been known to occur. Spanish laws do respond to external factors. For example, the law that created Spain’s Golden Visa was established in 2013. At that time there was a deep economic crisis, caused by the collapse of Spain’s housing bubble. There was a large inventory of unsold properties that were seized, or slated to be seized, by Spanish banks. These weighed heavily on public and private debt. Since domestic housing demand was virtually non-existent, the country did everything it could do encourage foreign investment.

Like any law, this one could undergo changes. For example, if the government decided it was more interested in infrastructure development, as opposed to selling real estate, it could increase the minimum floor for real estate investment and offer more advantageous programs for infrastructure investment. If this were to happen before you submitted your application, it could be negatively impacted.

In our opinion, this law will not suffer important changes in the next five to ten years. However, it is important to know that there is a small chance that the law could change. To talk more about this, call us today.

Q: Can the law regarding the right to have a Golden Visa be changed retroactively?

A:  One of the cornerstones of the Spanish legal system is that laws don’t have retroactive effects. This achieves legal stability with respect to acquired rights. Thus retroactive change is only applied in very exceptional cases.

Q: How long does Spain’s Golden Visa last?

A: Please note that there are two steps to this process. First you obtain the visa, which is a stamp in your passport issued by a Spanish Consulate. It allows you to travel to Spain, with multiple entries and exits, for one year. Within this year you should travel to Spain and apply for your residency permit. You must apply for this in Spain.

Q: How long are the residency permits valid?

Residency permits are initially valid for two years. After this period you can renew it. This renewal is valid for five years. You can continue renewing it every five years as long as you own properties in Spain. You do not have to reside in Spain in order to be allowed to renew your residency permit.

Q: How do I start the process?

A: In order to start the Golden Visa/Residency Permit process you must first purchase properties in excess of 500,000.00€.  You will need the purchase agreement(s) and the deed(s) to prove that you have made the investment(s). For information on how to obtain your title and other documentation, read 5 steps to take after purchasing property in Madrid.

Q: How long does the process take?

A: Once you apply for your residence permit, it takes about 50 days. Roughly 25 days to complete the application process and 25 days to receive your ID card.

Q: Does the Golden Visa only apply to me or can I extend it to family members?

A: Spain’s Golden Visa extends to immediate family members.  As Spain is one of the best places in the world to raise children, this is an attractive option if you have a family. Spouses and dependent children under the age of eighteen years are guaranteed residency permits.  For all other family members you must present paperwork proving they are your legal dependents.

Q: Can I get a mortgage to purchase my property?

A: Yes, but it has to be from a foreign bank. The logic is that will bring 500,000.00+€ of foreign investment into Spain. If you borrow money from a Spanish bank, you are not bringing money into the country. Our recommendation is to either pay in cash, or have your financing lined up before you purchase. Ideally, this will be with a bank you’ve done business with for years.

Q: If I buy property through a company, can I still get a Golden Visa?

A: Yes you can. All you have to do is prove that you, directly or indirectly, hold the majority of the voting rights and have the power to appoint or dismiss the majority of the board of directors. This needs to be demonstrated through official documents such as your company’s articles of incorporation. These documents should be notarized and translated into Spanish. Moreover, you can save up to 50% on Madrid real estate taxes if you set up a company to purchase your property.

Madrid has some beautiful properties. Contact us today for a free consultation to learn how to purchase one.

Q: Are there any scenarios under which the immigration authorities will deny renewing your residence permit?

A:  There are two scenarios under Spain’s Golden Visa program where you would be denied renewal. First, if you sell your property or transfer it into someone else’s name. Second, if you have a criminal record. If you have a criminal record you will not receive an initial residency permit.

Summary

When you purchase property in excess of 500,000.00€ you will receive a multiple entry visa which is valid for one year. Within this year you must go to Spain and apply, in person, for your residency permit. It is valid as long as you keep your Spanish properties in your name. You do not need to reside in Spain, but will have to come here each time you need to renew your residency permit. This is because you have to personally apply for your Spanish ID card.

If you decide to live in Spain, you are eligible for permanent residency after 5 years. nce you have a permanent residency permit you do not need to renew it. You just renew your ID card which is very fast and easy.

As you may of heard, navigating the Spanish bureaucracy can be time consuming, tricky and frustrating! We at Moving2Madrid have recommend the best to help for many Golden Visas and residence permits for our customers and can make the process very easy for you.   Given the time and headache we can save you, we think you will find using our services a very worthwhile investment. Please click here to schedule a  Free Consultation.

The post How to get EU residency for you and your family with Spain’s Golden Visa appeared first on Moving2Madrid.

You will see detailed information, including photos, on the following two case studies:

1. Historic first floor, light-filled apartment situated on a narrow street
2. Apartment with premium characteristics on a border street

Summary: If you buy a property in the 500-850k€ range, you can expect to achieve a return far above the Madrid market average of 4.6%. This is done by employing the Moving2Madrid strategy: find an apartment that other buyers would view as “defective,” then mitigate these defects. The investor in Case Study #1 achieves a 6.2% rental yield. The investor in Case Study #2 achieves a 5.5% rental yield.

1–Historic first floor, light-filled apartment on a narrow street

This property is located on Calle San Nicolas. It has two balconies with views of the oldest church in Madrid, San Nicolas. This historic church dates back to 1202. Although it is a first floor apartment, which are considered less desirable than apartments on higher floors, it has seven windows. That, and its historic location, allows it to achieve an excellent rental yield.

The apartment

This 100 m2 apartment was purchased for 464,000€.  It has four bedrooms, two full sized bathrooms and seven windows. It is located on the first floor, on the exterior. The building has an elevator.

Additonal closing costs on this apartment were 64,818€.

The refurbishment

The refurbishment costs for this apartment were 100,000€.

The total cost of this apartment, including the refurbishment and closing costs, was 628,818€.

The property investment return

Its monthly average rental revenue is 4,467€, which equates to 53,600€ per annum.

The property costs 14,532€ per year to maintain. Property management fees are 10,720€ per year. Community fees are 1,020€, gas, electricity and internet amount to 2,092€. The balance goes towards home insurance and taxes.

The property’s pre-tax return is currently 39,068€, which gives a rental yield of 6.2%. This is well above the Madrid market average of 4%

Do you want to achieve a similar rental yield on your Madrid property purchase? If so, contact us today to learn how.

2–Apartment with premium characteristics on a border street

This property is located on the border of Sol and Lavapiés.  Sol is arguably the best neighborhood for short-term rentals in Madrid and property is expensive: it was 5,263€/m2 at the end of 2018. Lavapiés, alough rated the Coolest Neighborhood in the World by TimeOut magazine, is still an up and coming neighborhood. Property in this neighborhood cost 4,239€/m2 at the end of 2018: a 20% discount to that in neighboring Sol. Although this property is technically located in Lavapiés, its close proximity to Sol allows it to achieve a very good rental yield.

Calle Duque de Alba Airbnb link

The apartment

This 159 m2 apartment was purchased for 641,250€.  It has five bedrooms, three bathrooms and eleven windows. It is located on the fourth floor, on the exterior. The building has an elevator.

Additonal closing costs on this apartment were 108,854€.

The refurbishment

The refurbishment costs for this apartment were 120,000€.

The total cost of this apartment, including the refurbishment and closing costs, was 850,104€.

The property investment return

Its monthly average rental revenue is 5,250€, which equates to 63,000€ per annum.

The property costs 16,462€ per year to maintain. Property management fees are 12,600€ per year. Community fees are 1,020€, electricty, gas and internet fees sum to 2,092€ and the rest of the yearly maintenance costs go to taxes and home insurance.

The property’s total before-tax return is currently 46,538€, which gives a very good rental yield of 5.5%. This easily surpasses the Madrid market average of 4.6%

Conclusion

Our case studies demonstrates that Moving2Madrid clients earn returns that far surpass Madrid market averages. We have clients that have purchased apartments in the 500-850k€ range with rental yields in the 5.5%-6.2% range- well above the Madrid average rental yield of 4.6%.

Do you want to achieve a similar rental yield on your Madrid property purchase? If so, arrange a FREE CONSULTATION to get started today.

The post M2M Best property investment return case study: 500-850k€ appeared first on Moving2Madrid.

We have received a large number of calls from US investors. Not only are they entering the Madrid real estate market in unprecedented numbers, but they have introduced a brand new financing technique that will allow them purchase Madrid real estate, and receive a Spanish Golden Visa, without paying US taxes!

Why do Americans suddenly want a Spanish Golden Visa?

US citizens are looking elsewhere. Due to its close proximity to Mexico, most Americans learn at least some Spanish in school. Most major cities, like Los Angeles, New York, Houston and Miami, have large Spanish speaking populations. In fact, more people in Miami speak Spanish in the home than English. Couple this with the fact that most of the people that speak Spanish and reside in Texas or California have dual US/Mexican citizenship and the case becomes even more compelling. This is because due to a special treaty, citizens of Mexico and other Latin American countries are eligible for Spanish citizenship after just two years of residency.

Once they start casting the net further, Spain is the logical choice. It is in Europe, has an excellent infrastructure and still enjoys a relatively low cost of living. This is an interesting anecdote, but also puts things in perspective regarding costs.  Parking spaces in New York City have become so expensive that some are selling for $1 million. If a New Yorker wants to leave the United States, buying an apartment in Madrid for 500,000€ seems like a relatively cheap option. For almost half the cost of a parking space, they could get EU residency, the right to work in the EU and be on track for EU citizenship.

Do you want to learn more about the requirements to get a Spanish Golden Visa? If so, arrange a free consulation today with one of our Property Shoppers.

The exchange rate factor

Although the underlying fundamentals were favorable for Americans to invest in Madrid real estate, in early 2018 the US dollar was weak, relative to the euro. In March, 2018 this started to change and the euro lost ground against the dollar. It slid until May, 2018 when it appeared to find support at the level of $1.16 per 1.00€.

Then, in late July, 2018 Donald Trump started a trade war with Turkey, doubling steel and aluminium tariffs. Simultaneously, Washington pushed Ankara to release Evangelical Christian pastor Andrew Brunson, who is being held on terrorism charges. The following day, Turkey doubled tariffs on key imports from the US, including passenger cars, alcohol and tobacco.

The loser in this was Turkey. The country had borrowed heavily to fund a massive construction boom. The trade war with Donald Trump was merely the catalyst that sent the Turkish lira into freefall. It took many exchange rates around the world with it, including the euro. In a few days it dropped 3% against the dollar.

US investors act very strategically

Many US buyers had been watching the exchange rate closely, waiting for an opportunity to purchase euros. Moving2Madrid has one client that had been tracking the dollar/euro exchange rate for months. The dollar hit a high, she bought a lot of euro and started seriously shopping for an apartment in Madrid. She had been “kicking the tires” on a number of flats for months, so was poised to buy when the exchange rate turned in her favor. She has already placed an initial offer on a property (contrato de arras) and will close in September, 2018. Then she will immediately start the paperwork to obtain her Spanish Golden Visa.

A tax free Spanish Golden Visa?

Another investor has taken things even further. She has discovered how to purchase an apartment in Madrid without paying US taxes, through her solo 401(k) plan.

What is a 401(k) plan?

Very few American have pensions. Most keep their retirement money in 401(k) plans.

A 401(k) is a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account. – WSJ.com

This investor had the idea to purchase an apartment in Madrid through her 401(k) plan. She brought the idea to Moving2Madrid, which we thought was fantastic.  We have worked closely with her, the IRS and the Spanish Government to make it happen. To learn the step-by-step process, read How to invest in Madrid real estate through your solo 401(k) plan.

If you wish to learn how you can purchase a Madrid apartment through your 401(k) plan, contact us today to learn more about the process.

The answer is . . .

Americans wanting Spanish Golden Visas isn’t a recent phenomenon. Many began researching other citizenship options when Donald Trump was elected. Although many initially looked into English speaking countries (primarily Canada and New Zealand), a large percentage of Americans speak Spanish and started learning about the Spanish Golden Visa program. These investors have proven patient and savvy. They waited for the euro to drop and used state-of-the-art investment tools to make their purchases as cost efficient as possible. It will be interesting to see what they come up with next!

Follow this blog to stay up to date on the latest news affecting the Madrid real estate market.

The post Why Americans want a Spanish Golden Visa appeared first on Moving2Madrid.

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As Boris Johnson won a convincing victory to “Get Brexit Done,” leaving the EU has become a reality for UK citizens. According to the Financial Times, citizenship planning agencies saw their traffic grow ninefold, post the 2016 referendum. Now that Brexit is a reality, the number of Brits wanting EU citizenship is expected to increase even more. This article explains which countries have the best Golden Visa programs via property investment for those wanting to emigrate to the EU, or obtain the right to work in the EU for themselves and their children.

Which countries offer Golden Visas?

A number of countries offer Golden Visas. Prior to the 2008 downturn, they were mainly in the Caribbean. After the economic slide, European countries with good weather (and weak national balance sheets) began offering Golden Visas. They are attractive because most of them include the right to work and travel within the Schengen area.

Over the past three years, we have received many calls from people in the City of London worried about losing their EU work permits. Banks have already moved hundreds of thousands of jobs out of London. Most jobs have moved to Frankfurt and Dublin, although Madrid has also benefited.

Given Johnson’s landslide victory, more banking jobs (and jobs in other industries) will leave the UK.  Bankers who lose their jobs will have difficulty transitioning to the EU with their UK passports. However, they can apply for a Golden Visa and obtain long-term residency/citizenship in Bulgaria, Cyprus, Greece, Malta, Spain and Portugal.

What types of Golden Visas are available?

There are a number of options available. For example, Portugal issues Golden Visas for people that invest over 250,000€ in its cultural heritage. Bulgaria issues Golden Visas for people that invest over 1 million Bulgarian levs (around 500,000€) in Bulgarian Government bonds. France offers a visa for anyone that invests over 10,000,000€ in the country.

Although interesting, most of the above are impractical for anyone but the super rich. This article will focus on the best golden visa achieved through real estate investment. These are the most practical for those with labor related post Brexit fears. They are also attractive for financial professionals, many of whom have limited investment options due to compliance related issues.

What makes a Golden Visa “good?”

There are many variations to be considered when choosing the best golden visa. We view the following to be most important:

• Low required investment.
• Small amount of time required to actually reside in the country.
• Short time required to gain full citizenship.
• Ability and ease of family members to also gain residency and/or citizenship.
• Potential to earn a high return on associated real estate investment.

UPDATE: The OECD Blacklist

In October, 2018 (ten months after this blog post was originally published), the OECD published a report aimed at countering international tax evasion.  After analyzing Golden Visa programs operated by 100 countries, the OECD created a “blacklist” of 100 countries. They said these countries  attract investors by offering low personal tax rates on income from foreign financial assets. Furthermore, these countries do not require an individual to spend a significant amount of time in the country. Three European countries: Malta, Monaco and Cyprus, were on that list. Importantly, Spain, Portugal and Greece are the only three European countries that offer a Golden Visa through property investment that are not on the OECD Blacklist. 

Summary of Golden Visa characteristics, by country

Cyprus

Cyprus is an interesting country because it is running two schemes. Like the other countries, you can make an initial property investment. This grants long-term residency. After a number of years, this can be converted to citizenship.

Alternatively, for a much larger investment, you can gain citizenship within six months.

Greece

Malta

Portugal

Spain

Property Market Overview

There is a large disparity in real estate prices in Europe’s Golden Visa countries. Malta is the most expensive and property prices appear fully valued. Greece is quite cheap and property prices have stabilized, but any investment in the country is still very risky. The economic fundamentals in Cyprus are strong, but real estate prices are still sliding. Portugal prices have increased greatly, but economic fundamentals don’t appear to support further property price appreciation. Real estate prices in Spain have trended up in recent years, but fundamentals are strong and there appears to be room for appreciation.

To learn more about the opportunities for price appreciation in the Spanish real estate market, read Why the Madrid property market is still the best in Europe.  If you’d like to learn more about how to invest in Madrid real estate, arrange a FREE CONSULTATION with us today!

There are a number of factors that drive property prices. The primary two are a country’s GDP and interest rates. All of the European countries that offer Golden Visas have loans tied to Euribor, since they are in the European Currency Union. Therefore, we will focus on GDP growth.

Malta has the strongest GDP growth of all these countries, followed by Cyprus and Spain. Greece is doing surprisingly well, given how close they were to bankruptcy a couple years ago. Portugal’s economic prospects are constrained, and are bound to negatively impact the housing market.

All of these countries introduced Golden Visas to raise money after the 2008 financial downturn, so we can’t expect them to be Aaa rated. However, unless you have a large appetite for risk, it’s logical to expect that the country is at least investment grade. As you can see in the following chart, only Malta, Spain and Portugal have investment grade ratings. The rest are considered junk bonds.

Country Summary

Cyprus

Cyprus has a relatively low investment threshold to gain visas its standard Golden Visa, but property prices are still in decline. If you want to get a Golden Visa via real estate investment in this country, be prepared for your investment to decline in value. The country’s fast track visa is appealing if you want full citizenship quickly, but aside from the required two million euro property investment, you also have to keep 30,000€ in a Cypriot bank for three years. That is a lot of money to have tied up in a country with a non investment grade credit rating that is subject to “substantial credit risk.”

Greece

Greece and Cyprus has the lowest investment threshold to get a Golden Visa. Real estate prices have stabilized after dropping for years and GDP is back in positive growth territory. However, the country has the weakest credit rating of all European countries that offer Golden Visas. Moody’s believes investment in the country is still “subject to high sovereign credit risk.” Moreover, even though the country offers citizenship relatively quickly, you have to reside in Greece. This is useless if you want to work in another part of the EU.

Malta

Malta is the country with the best credit rating, it grants citizenship quickly (after one year) and there is no need to reside in the country. However, real estate prices are extremely expensive and there appears to be little room for price appreciation. The Golden Visa is also extremely expensive. Your property purchase must be at least 320,000€ to qualify for a Golden Visa. This seems low, however you must purchase, and hold for five years, 250,000€ of government bonds and make a 35,500€ contribution to the Maltese Government. It also has very expensive processing fees: roughly 40,000€. It’s a good option if you want to work in the EU, don’t have the millions required for fast track Cypriot citizenship but still have over six hundred thousand euros to burn. There is also the issue that it has capped the number of Golden Visas it issues at 1,800 people, many of which have been claimed.

Spain & Portugal

Portugal and Spain have similar Golden Visa programs. Portugal’s main advantage is that it grants citizenship after six years, whereas it takes the Spanish Government ten years. They both offer permanent residency after five years.

The two countries have very different investment profiles. Portugal’s GDP growth is one of the lowest in Europe and property prices are more expensive than those in Spain. Finally, its Golden Visa program has also been been wracked by scandal.

Spain, on the other hand, has been ranked as one of the best places to purchase property. The Madrid property market still has room for price appreciation- particularly if you purchase a property and renovate it. There are no residence requirements in the first five years, and after that they are limited, so it is your best choice if you are worried about short and medium term post-Brexit work opportunities. If you are close to retirement age and want your children to be able to work in the EU, it is by far the best Golden Visa. The icing on the cake: you stand to make a lot of money on your property investment.

Conclusion: Which country offers the best Golden Visa?

All of the Golden Visa programs are different. The one that offers the best golden visa depends upon your needs and risk appetite.

• Post October, 2018, if you are risk averse you should strike any OECD blacklisted country off your list. So forget Cyprus and Malta. Portugal’s program has also been hit by scandal.
• If you’re not super rich, it’s important to factor the potential for your investment to appreciate into your Golden Visa consideration.
• Greece’s program has a low investment threshold. Even though the property market has stabilized, the economy is still in a precarious position.
• Spain’s program has the best international reputation and the investment threshold is relatively low. Moreover, its economy is strong and Madrid is the best European city for property investment. Therefore, it is safe to say that Spain offers the best Golden Visa.

To learn how to purchase Spanish real estate and get your Golden Visa, set up an appointment today to speak with one of our search specialists. We are not only experts in the Madrid market, but our legal team contains immigration experts. 

The post Which European country offers the best Golden Visa? appeared first on Moving2Madrid.

The Spanish Golden Visa program is the most desirable in Europe

A number of countries offer Golden Visas. Prior to the 2008 downturn, they were mainly in the Caribbean. After the economic slide, European countries with good weather (and weak national balance sheets) began offering Golden Visas. They are attractive because most of them include the right to work and travel within the Schengen area.

There are a few ways to get Golden Visas: through a property purchase (the focus on this article), through investment in a country’s government bonds, through investment in a country’s artistic heritage, parking a bunch of money in a bank account in a country and/or just general investment in the country. For all but the super rich, investing in property is the best way to get a Golden Visa. The following European countries offer Golden Visa property purchase schemes: Spain, Portugal, Greece, Cyprus, Malta and Monaco.

Why Spain’s Golden Visa program is the best

In summary, it has the strongest property market and the best sovereign credit rating of all the above countries. There are no residency requirements and it is not on the OECD blacklist. Malta, Cyprus and Monaco have the intense disadvantage of being on this list. To learn the details about why Spain’s Golden Visa property purchase program is the best, please read: Which European country offers the best Golden Visa.

What you get when you have Spanish residency

In addition to not having to live in your home country, which can be a compelling reason for many living in South America or those American wishing to escape the Trump Presidency, Spanish residency (and eventually citizenship) offers the following benefits:

• Residency for your immediate and extended family (grandparents and siblings).
• Very cheap access to the world’s third best healthcare system.
• Legal right to work elsewhere in the European Union.
• Access to Spain’s cheap, high quality university system.

Do you desire European residency, and ultimately citizenship, for yourself and your family? If so, CONTACT US TODAY to get started on your Golden Visa property purchase.

Madrid has an older apartment stock that allows you to rehab a place exactly to your taste

How much investment is required for your Spanish Golden Visa property purchase?

One is required to invest a minimum of 500,000€ in Spanish property. It must be paid for in cash, or with a foreign mortgage. Note: investment in refurbishment is not included in this 500,000€.

If you buy one apartment instead of two, you can increase your rental yield by 25%, on average

Many of our clients wish to purchase two properties: one in which to live and the other to earn rental income.

We have learned that if you buy one apartment instead of two, you can increase your rental yield by 25%, on average. Plus you get a property you really like and want to come visit. Moreover, that property will differentiate itself on the rental market and be significantly more resist to future market gyrations.

The Sweet Spot

400k€-650k€

We have been active players in the Madrid property market for years. In our experience, we have discovered what we call the “Sweet Spot.” This is the price range that yields the greatest return for Madrid property investment. This range changes over time. Currently, it is between 380k€ and 650k€. If you invest in a property in this price range, you can expect a 5.5% rental yield.

When you invest 400k€ or more in a property you can find one with a differentiating factor, such as this lovely sliding door and view, that will allow it to outperform on the rental market

Properties less than 400k€

In this range, rental yield is less than 5.5%. Why? There are a number of reasons:

• Your fixed costs are too high, relative to the amount of square feet you can obtain in this price range. Meaning you can’t effectively amortize your fixed costs.
• In this end of the market, apartments are pretty generic. It is almost impossible to find differentiating characteristics, such as French doors or a balcony, that make the apartment “pop.” Differentiating characteristics fuel rental yields and resale value.
• At this price range, you are unlikely to get two bedrooms. Two bedroom apartments perform much better on the rental market.

Properties greater than 550k€

Apartments over 550k€ are getting into the luxury range. If you want an apartment to live in and enjoy the extra touches, then it might make sense to invest over half a million euros. If you are buying an apartment for investment purposes, it is hard to get compensated for your extra expense. Short and medium term renters do not wish to pay extra for the little luxurious touches that you may enjoy if you are purchasing the property for your own use.

The most important thing to keep in mind in this price range,

“What you like and what is a good investment are often contradictory.” – Brian, M2M Property Analyst

Case Study: One apartment vs. two

To see the difference it makes purchasing a property in the Sweet Spot, let’s look at an example. In the first case, assume you purchase two properties for 250k€ each. In the second case, assume you purchase one property for 500k€. In both scenarios you get a Golden Visa. However, there is a big difference in the rental yields.

Example 1: You purchase two properties for 250k€ each. For a property this size, you can expect to earn  a 4% rental yield. Thus in this scenario, the two properties combined would earn you a combined monthly yield of 1667€ (833€ per month times two).

Example 2: You purchase one property for 500k€. For a property this size, you can expect to earn a 5.5% rental yield. In this scenario, the property would earn you a monthly yield of 2300€.

As you can see, buying a more expensive property allows you to earn 625€ more per month in rental income. Clearly, buying an apartment in the Sweet Spot is the way to optimize your Golden Visa property purchase.

Smaller apartments just don’t achieve the rental return achieved by apartments in the Sweet Spot

A clever way to “have your cake and eat it too”

If you want to buy a second apartment for rental income, Golden Visa holders have an option that will allow them to buy two apartments without sacrificing rental yield.

If you have a Golden Visa and thus Spanish residency, you will be able to get a Spanish mortgage. So you do your property purchases in two steps:

1. Purchase a property in which to live for 500k€. This will be sufficient to get your Golden Visa.
2. After you get your visa, take out a mortgage to purchase another property in the 380k€-650k€ range. As a Spanish resident, you can get a visa for up to 90% of the property value. Rent this out at a 5.5% rental yield. Read this to learn how to optimize your Spanish mortgage fees.

If you want to learn more about getting a Spanish mortgage, don’t hesitate to arrange a FREE CONSULTATION with one of our property shoppers.

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The good news: You have worked hard and accumulated savings that you are free to invest as you wish- Congratulations!

The potentially bad news:  Your hard-earned funds are parked in a low-interest account that barely earns enough to compensate for inflation.  This is important to take into consideration. For example, if you are only earning a 1% return on your money, but prices are rising by 2% every year, you have lost purchasing power by keeping your money in the bank instead of spending it. Depending on where you live, the inflation effect could mean that your bank account is earning a return as little as 1%, or even a negative return, when you adjust it for inflation.

The potentially ugly news: Your funds are currently sitting in a bank account and not earning any interest at all.

Your solution: You decide to put your money to work. Real estate investment seems relatively safe while simultaneously yielding an attractive return. Furthermore, property investment could prove useful for your family visits to Madrid!

The deciding factor: What kind of return on a Madrid real estate investment can you realistically expect to achieve?

Madrid offers some of the best real estate investment opportunities

The average gross return on Madrid real estate investment is roughly 4-4.5% of the property price. After accounting for both fixed and variable costs, this usually filters down to a 3-3.5% return equivalent on your long-term rental property investment.

Moving2Madrid clients typically earn returns 50-100% above average. To put this in perspective, we are able to obtain an average pre-cost return of 9-14% for our clients. After accounting for all costs, our managed properties average a post-cost, pre-tax return equivalent to 5,5-8%, after a first transition period and when we optimize the purchase for investment. With capital appreciation, and the fact that we purchase undervalued properties, we obtain the equivalent of a 6-8% net return for our portfolio (See examples below).

Do you want to achieve these above market returns on your Madrid real estate investment? If so, you need a 360º view and an expert approach to make sure you get the most out of your property investment. We here at Moving2Madrid know how to find undervalued properties, renovate them to obtain high-margin rental clients and manage the properties efficiently and effectively. Contact us today to get started!

Return is not just about rental yields

Return is also about the potential for capital appreciation. If you purchase a property in Madrid’s city center, current reports have that prices increased 19% from 2016 to 2021. Not many cities can come close to this, particularly those that, like Madrid, have relatively low entry costs.

In fact, it’s in the “sweet spot” for property investment. The entry price is extremely cheap, and average returns on Madrid property investment are some of the best in Europe- particularly among leading capital cities. Prices are forecast to further appreciate in coming years as the Spanish economy continues to expand. This will be enhanced by the lack of housing capacity in central Madrid.

The Moving2Madrid real estate investment advantage

If you let us help you, we can improve upon this. We know how to:

• Refurbish an undervalued property so that its value increases beyond your initial investment and variable costs.
• Create a strategy to help you achieve a targeted return in a given time frame.
• Time your investment advantageously.
• Invest in the neighborhoods with the highest margins for improvement. These are currently Lavapiés, Malasaña and Sol.  Areas like Chueca, Huertas, and Palacio are more stable.

We can also teach you How to buy property in Madrid, educate you about Spanish taxes and teach you best negotiation practices.

We have the track record, process and team to achieve net returns 50-100% above market averages.

These are some examples of the types of property in which you can invest.

We continually update our website with the most recent information available about real estate investment in Madrid. We detail costs, the best neighborhoods, how to optimize taxes and more. Keep checking back! If you need help understanding how a Madrid real estate investment can make your valued savings work harder, and better, don’t hesitate to contact us or request a consultation.

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