INVESTMENT is always seen as a bit of a gamble, a way of saving with hopes of a hefty future return. But, in the current climate with sky–high stock market prices and negative interest yields, investors can be overcautious and asking where can they safely put their money? There are no guarantees that you can walk away with a good return whether you invest in the stock market, property or in a business venture. What can make a great difference in success or failure is actually how you invest.
Some of the main factors to take into consideration when making investment decisions are the product, time and place and also your window of opportunity.
You should become familiar with the product you are buying into, you must do your homework. As for time, look at how your particular type of venture performed in its specific area or market in the past, its current performance and a proposed future performance. This will allow you to have a sense of growth or if there looks to be a fluctuating cycle. Having an idea of this will lead to identifying the opportunity, as your opportunity make your savings grow, earning income and gaining value.
Buying during a growth cycle will cost more but offers more direct earnings whilst buying on a downward cycle will get you a bargain but you will have to wait longer for a high income. Avoid buying during a peak cycle when assets tend to overvalued and are set to dip in both value and income–generating potential.
Looking at properties bought to rent on the Costa del Sol as assets is an interesting proposition as the region’s real estate market has grown stronger over the last five years with a renewed construction sector and a particular interest in modern properties.
The demand for properties to buy in Marbella and surrounding areas has remained strong across a broad group of buyers from Spain and abroad. However, it is being outperformed by the rental market, where rent has risen greatly for short holiday lets and long term rentals.
The reason for the first option is because the region has consistent high year-round tourist numbers catering to thinks like golfing and spa holidays or cultural travel. On the other hand, long term lets are popular as many of the current residents cannot afford to buy or fulfill strict mortgage requirements and therefore look to rent.
Many of those renting are professionals with good earning power, so knowing how to manage holiday or long term rents allows you to earn a good return on your investment whilst watching its value grow. If however, you find it difficult to manage or organise from abroad there are professional property management firms willing to help.