Had a really interesting chat with a couple of our friends last night.
They've been to our place in Spain a couple of times and have done the norm and fallen in love with the Andalucian scene.
They have the cash to buy a place of circa 250,000 euros as a holiday home.
Last time over in June they looked at a couple of places and earmarked one to see again and probably make an offer if it's still for sale this September.
Anyway last night they informed us of a possible different strategy.
They now say that with the money they may buy 2 nice terrace or semi-detatched estate properties in the UK, rent them out for circa £500 each per month and use the income to rent villas in Spain for 10 weeks a year.
They wanted my opinion..........
My answer was that their latest plan certainly makes sense and I would do that if we were to go and live there full time, but I said part of the excitement is having your "very own" place to go to and that for me beats any financial gain the new plan offers.
That was all I could offer and OH to some extent agreed...........I'd love to know what you guys would have said as most of you are in or have been in a similar boat.
Cheers,
Kenny
Which option for an Andalucian life?
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Campo Kenny
Which option for an Andalucian life?
Last edited by Campo Kenny on Wed Aug 22, 2007 10:22 am, edited 1 time in total.
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wendyakemp
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I agree Kenny, lots of people I know have invested in the u.k. buy to let, they are making plenty but will have to wait quite some years to actually buy into their foreign dream.
The same people are keen to buy something rentable here whereas I still have my u.k. property but bought something just for me.
I think the best bit is being able to go whenever I like and knowing that all your own bits are there waiting for you. No minimalist rental property for me.
As I am not brave I bought a cheaper property so that I don't have to burn my bridges, so to speak.....but each to their own. It gives us something to chat about.
The same people are keen to buy something rentable here whereas I still have my u.k. property but bought something just for me.
I think the best bit is being able to go whenever I like and knowing that all your own bits are there waiting for you. No minimalist rental property for me.
As I am not brave I bought a cheaper property so that I don't have to burn my bridges, so to speak.....but each to their own. It gives us something to chat about.
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Campo Kenny
Spot on Wendy. I was trying to say to them that yes, the rental idea is good and would more than pay for their stays but at the same time without as you say having that "talking point"
I guess they are asuming as well as the money from the rentals their capital investment is more likely to grow in UK bricks and mortar.
Myself and OH did stress that our place is not for investment,......it's for fun/hobby/something different, and if we got most of our money back when we sold then no probs.....we haven't bought it to worry how much it appreciates/depreciates..........guess it is all horses for courses at the end of the day and advice is hard to give.
Kenny
I guess they are asuming as well as the money from the rentals their capital investment is more likely to grow in UK bricks and mortar.
Myself and OH did stress that our place is not for investment,......it's for fun/hobby/something different, and if we got most of our money back when we sold then no probs.....we haven't bought it to worry how much it appreciates/depreciates..........guess it is all horses for courses at the end of the day and advice is hard to give.
Kenny
For the moment I would go for plan B and invest in the UK. They would have a vast choice of rental properties in Spain and rental prices are dropping fast. Due to the present uncertainty it wouldn't do any harm to delay purchasing here for a couple of years. If they invest in the UK I would buy houses in a run down area as you can get a good guaranteed income for the local authority (asylum seekers etc.) and they clean and decorate etc. when you want it back, no hassle. These places are usually the easiest to sell quick too.
I do see the point about being able to leave all your stuff if you own the place. When we just had a holiday home here it was great to fly off on Thurs evening for a long weekend and just take a handbag. I used to leave a duplicate set of make-up too.
There are pros and cons for each. I know a couple who rent every year from Oct to March and get a good price. They even have a car here and a few boxes of stuff they have is stored by a friend. It does give you lots of time to see what is available to buy and get to know all the areas really well. Owning can be a lot of fun but also a lot of hassle if you get the wrong place, some seem to spend all their spare time here in Leroy Merlin and doing odd jobs.
I have friends near Ronda and they don't visit much, they are having a huge problem with neighbours who gget over the wall and use the pool.
Hey, it seems to be raining
cutting it short, all the pool stuff is out!!
I do see the point about being able to leave all your stuff if you own the place. When we just had a holiday home here it was great to fly off on Thurs evening for a long weekend and just take a handbag. I used to leave a duplicate set of make-up too.
There are pros and cons for each. I know a couple who rent every year from Oct to March and get a good price. They even have a car here and a few boxes of stuff they have is stored by a friend. It does give you lots of time to see what is available to buy and get to know all the areas really well. Owning can be a lot of fun but also a lot of hassle if you get the wrong place, some seem to spend all their spare time here in Leroy Merlin and doing odd jobs.
I have friends near Ronda and they don't visit much, they are having a huge problem with neighbours who gget over the wall and use the pool.
Hey, it seems to be raining
cutting it short, all the pool stuff is out!!-
Valencia_Paul
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I think the UK property idea makes most sense. I think owning a foreign holiday home only works if 1) you have enough time in the year to go there and 2) you can make some rental returns on the property.
I bought my Spanish holiday flat in early 2004 and in hindsight I wish I hadn't. Although I have enjoyed staying there on many occasions I work full time and only have 27 days leave per year so a max of 4 weeks.
The cost of ownership makes you want to use the place for every holiday but my circumstances and preferences have changed. You know what? I fancy taking my holidays in other places like Greek islands, France, Italy, Turkey and other parts of Spain and now the holiday flat feels like a bind.
Just my thoughts but remember if you have a mortgaged holiday home you can feel resentment at "having" to holiday there every time. Variety is the spice of life. My flat goes on the market this year, I've bought a bigger house in the UK and if I have any cash left after selling the Spanish flat I'll re-invest in UK property.
I bought my Spanish holiday flat in early 2004 and in hindsight I wish I hadn't. Although I have enjoyed staying there on many occasions I work full time and only have 27 days leave per year so a max of 4 weeks.
The cost of ownership makes you want to use the place for every holiday but my circumstances and preferences have changed. You know what? I fancy taking my holidays in other places like Greek islands, France, Italy, Turkey and other parts of Spain and now the holiday flat feels like a bind.
Just my thoughts but remember if you have a mortgaged holiday home you can feel resentment at "having" to holiday there every time. Variety is the spice of life. My flat goes on the market this year, I've bought a bigger house in the UK and if I have any cash left after selling the Spanish flat I'll re-invest in UK property.
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Campo Kenny
Katy, good points....hope your pool stuff is OK.
Paul, you've hit the nail on the head with regards to the downside of owning a place. ie we haven't been abroad anywhere else since we bought our first place in Spain 6 years ago....it does I feel make you think you need to use the place for every break.
Also trying to use it enough...........we're now up to 10-12 weeks a year, not bad but could do with more.
From a personal point of view we'd never rent our place out...it's ours and personal so that is not an option.....does seem a shame not making money on it but that's the way it goes.
Kenny
Paul, you've hit the nail on the head with regards to the downside of owning a place. ie we haven't been abroad anywhere else since we bought our first place in Spain 6 years ago....it does I feel make you think you need to use the place for every break.
Also trying to use it enough...........we're now up to 10-12 weeks a year, not bad but could do with more.
From a personal point of view we'd never rent our place out...it's ours and personal so that is not an option.....does seem a shame not making money on it but that's the way it goes.
Kenny
With the £250,000 invested in the uk, at say 5% net in interest, your pals could have an income of 12.5K. they could rent long term in spain with this and have plenty change left over. their original capital hasn't been "eaten into"
Just another talking point.
Just another talking point.
There is no such thing as gravity-Earth sucks
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Campo Kenny
I agree with Valencia-paul too. Will you always want/feel obliged to go to the same place. I still enjoy holidays to other places even though I live here and if you want decent weather in winter it is necessary to travel out of Spain. There are many places I like holidaying, wouldn't want to live in them. I also enjoy staying in hotels, no thinking do we need any shopping, whose going for bread etc.
We got fed up with our holiday home and as the kids got older they weren't interested in coming unless they invited lots of friends. Rented it long term for 4 years and sold it when we came back. I do think there are pros and cons for each option. Would never look at it as an investment though (in Spain)
We got fed up with our holiday home and as the kids got older they weren't interested in coming unless they invited lots of friends. Rented it long term for 4 years and sold it when we came back. I do think there are pros and cons for each option. Would never look at it as an investment though (in Spain)
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Campo Kenny
I know what you mean kenny. having spent 2 years getting our house reformed, we couldn't just flog it. Too many "happy" memories/hassles. Like you said, having gone the extra mile to buy the place, it is a great feeling of satisfaction to own it outright. 
There is no such thing as gravity-Earth sucks
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masterob
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I´m with Katy and Valencia_Paul on this. But then I have never understood the attraction of buying a holiday home anywhere. As they say, you feel obliged to use it as much as possible and therefore miss out on the attraction of visiting new and different places. Also, for me a holiday is staying in a comfortable hotel and enjoying the luxury rather than having to do the same home chores but in a different location! Each to his/her own I guess!
Slightly of point, I would also urge caution in buying a holiday home in Spain with the ultimate intention to retire here. Holidaying somewhere, however often, is not the same as living permanently here. Am I speaking with the benefit of hindsight? yes!!
Slightly of point, I would also urge caution in buying a holiday home in Spain with the ultimate intention to retire here. Holidaying somewhere, however often, is not the same as living permanently here. Am I speaking with the benefit of hindsight? yes!!
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hillybilly
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...and I'm with masterob!masterob wrote:I´m with Katy and Valencia_Paul on this. But then I have never understood the attraction of buying a holiday home anywhere. As they say, you feel obliged to use it as much as possible and therefore miss out on the attraction of visiting new and different places.
Lots of good sense been offered here, the ideals of everyone of course are not the same, when we bought our place here in the seventies we got a bargain, nowadays I'm not sure if I would buy outright, and would certainly not do it at all unless I had a backup property in the UK, personally in the current finacial climate I would be inclined to buy the terrace properties in the UK and rent for a block period of 10-12 weeks in Spain when I want, no residencia, or messing about with driving licences etc, drive down, enjoy, drive back 
Ah! the full english!!
Agree. We often go back to the Nerja area for some of our holidays, but I love the freedom of being able to go exactly where we want. We normally go to Spain,and have stayed in most parts of Andalucia, Alicante area, Valencia, Mallorca, Ibiza, Lanzarote etc, Next month, we have nearly a month in Spain, and we are starting in Vejer de la Frontera, and finishing near Nerja, where we are for the middle 2 weeks has not even been decided yet! Much as I like certain places, I would hate to spend the rest of my days just staying there, and missing out on all the other great places. We are not slabbing out on the beach, terraza types, we like to get around, find new places, so just staying put in the same spot forever, is not for us. But as you say, horses for courses. People, like places, are all different, it's nice to meet all sorts.masterob wrote:I´m with Katy and Valencia_Paul on this. But then I have never understood the attraction of buying a holiday home anywhere. As they say, you feel obliged to use it as much as possible and therefore miss out on the attraction of visiting new and different places. Also, for me a holiday is staying in a comfortable hotel and enjoying the luxury rather than having to do the same home chores but in a different location! Each to his/her own I guess!
Regards, Frank
No soy residente, simplemente un turista, ¿qué sé yo?
No soy residente, simplemente un turista, ¿qué sé yo?
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Faire d'Income
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Kenny, not really enough information to give an informed opinion but it depends on their age, aspirations and experience of the property market.
Taking the UK terraced properties as examples, whilst £500.00 per month sounds like a good plan they're probably forgetting to factor in void months, maintenance, income tax at 40% and even assuming they make any capital growth then CGT (albeit tapered relief) will all take significant chunks out of the income. They'd also be buying at the top of the market unless they're prepared to invest in property that needs renovating - believe me, unless you've got exactly what the market wants shifting property at the moment isn't that easy.
With regard to the Spanish property, provided they invested in the right location (inland older type with correct paperwork) and they were prepared to put some effort in then they could end up with a decent house with letting potential.
I can understand people's motivation for not letting out their houses but equally there are some valid reasons for doing so:
1. The income can be used to either subsidise the mortagage or re-invest in the property.
2. If houses are left unoccupied for too long, then they deteriorate far more quickly than houses that are lived in and whilst this sounds odd its very true.
3. As far as feeling obliged to use it, then this can be an issue. However, since we got married we've had three two week holidays per annum for ten years so we've been around. Additionally, I've lived in a few different countries so settling down (so to speak) in Spain for a few years has been refreshing instead of rushing off to yet another country for a two weeker. My five year plan with the Spanish property dictates that in a couple of years it should be paying for itself from rental income which will enable us the choice of holidaying in Spain or elsewhere.
Taking the UK terraced properties as examples, whilst £500.00 per month sounds like a good plan they're probably forgetting to factor in void months, maintenance, income tax at 40% and even assuming they make any capital growth then CGT (albeit tapered relief) will all take significant chunks out of the income. They'd also be buying at the top of the market unless they're prepared to invest in property that needs renovating - believe me, unless you've got exactly what the market wants shifting property at the moment isn't that easy.
With regard to the Spanish property, provided they invested in the right location (inland older type with correct paperwork) and they were prepared to put some effort in then they could end up with a decent house with letting potential.
I can understand people's motivation for not letting out their houses but equally there are some valid reasons for doing so:
1. The income can be used to either subsidise the mortagage or re-invest in the property.
2. If houses are left unoccupied for too long, then they deteriorate far more quickly than houses that are lived in and whilst this sounds odd its very true.
3. As far as feeling obliged to use it, then this can be an issue. However, since we got married we've had three two week holidays per annum for ten years so we've been around. Additionally, I've lived in a few different countries so settling down (so to speak) in Spain for a few years has been refreshing instead of rushing off to yet another country for a two weeker. My five year plan with the Spanish property dictates that in a couple of years it should be paying for itself from rental income which will enable us the choice of holidaying in Spain or elsewhere.
I am with Kenny as we bought a holiday home but because of our age have been lots of places in the world and are more than Happy to go to our place and it does feel special. To get there with all your things there and do your own thing and not have to dress up just to go for your meals.We would never rent it out too many bad stories. I never get fed up going and it is four years now and it is fun. The thing about going it is variety and is different from being here. I would not burn my bridges and we don't look on it as an investment as it is for our family to enjoy. Your friends do seem interested in the money side and that's fine we all have different opinions and views in life.
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Valencia_Paul
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