Income generating property: how to choose a reliable consultant
Low prices for commercial property, tolerant attitude towards foreign investment, government support for new products and services, “cushions” for getting the residence permit easily when you make an investment - all these aspects make Spain a true paradise for those who want to start a business in Europe. But even though the idea seems so tempting there is always a problem all potential investors have to face: lack of information. What niche is the best to choose? What regions are the most promising? Is it worth starting a new business or is it safer to purchase an already existing company?
The Internet is overloaded with information on all possible statistics and analytics. But these data are often so contradictory that it is easy to get lost in them without knowing what is actually going on in the market. If you know Spanish you can check on local newspapers and reports but what if your language is not fluent enough to study market development and Spanish broker’s board reports? You can keep on struggling against the stream and get bumps and bruises, trying hard to filter the incoming information on your own, or you can find a reliable advisor and save both time and money. But to find the right person? Before we answer to this question of the utmost importance, let’s have a look at the process of buying property. What stages does it consist of?
1. Choosing property. It is not enough to know the basics of investment business to make a profitable investment in a foreign country. You need to be aware of local specifics of profitability. An abandoned house or shop can turn out to be a treasure, but most probably it will be your headache for many years, with legal battles and debts from previous owner. You will probably spend years trying to get rid of a “dead” property in an isolated place. Of course, you will visit the place before you buy it - this is what any sensible person would do, but it might be not enough if you don’t know the intricacies of local market, area and laws. Will an investment into a tennis club in Marbella be profitable? How long will it take a restaurant in Costa Brava to pay for itself ? A professional consultant who knows all the nuances of area selection, business niches and laws will explain all about it to you.
2. Negotiations with owner. Let’s assume that after multiple trips and loads of efforts you have found a property you want. Now it’s time to meet its owners. Another problem is coming your way, this time it’s a language barrier. It might turn out to be an overreach to discuss prices, demands and check documents without a good translator. But even a professional translator is not enough because you will want to know about the design details, reports from register of properties, rental contracts, maintenance cost, and all other reports for previous years. If you don’t know which documents exactly should be translated in your particular case and which ones are not so important, if you don’t know what is the best way to communicate with Spanish owners or their representatives, what is better to avoid and what is worth special attention, you will hardly ever get a successful result.
3. Paperwork and bureaucracy. It is common knowledge that Spanish bureaucracy can outshine the whole shoot of authorities from the rest of Europe. Endless siestas and holidays, planned and unplanned days off, spontaneous weekends, let alone Spanish legendary slowness and “forgetfulness” along with a huge list of required documents make a perfect combination for hindering your deal for ages. Even a simple contract will need a variety of approvals the amount of which grows like a snowball. It is also important to remember that each province has their own laws, which means that local authorities can require additional licenses and slow down the deal even more. By the way, signing a sale contract is not a final destination of this intriguing journey called “Spanish red tape”. Next thing you will have to go through is a crazy process of paying taxes, negotiations with a notary officer, bank workers and many other representatives of state authorities. If you want to travel all the circles of Spanish bureaucracy from forming a business plan to registering your company without losing time, energy and hopes, you’d better have a smart professional advisor.
4. Finances. When you purchase property in Spain you should have an account in a local bank in an amount of the minimum registered capital. If you need a bank loan you will also need to select a program that suits you most and get the approval. It is worth noting that Spanish banks welcome foreigners investing into business objects: you will be able to get up to 60% of the required sum, especially if you manage to prove that your objects are profitable. Having a perfect business plan and extra money will add to your credit. A reliable business consultant who can professionally read the notorious “small print” will make the process of finding the best conditions and taking a loan as smooth and efficient as possible.
5. Residence permit. If you want to keep abreast of business events you will definitely need a residence permit. It is possible to start a business in Spain without it, and when you already own a business it will be easier for you to get it. Investor residence permit is different from a standard one because chances for a positive outcome are much higher. Besides, you don’t have to live in the country all the time, and you will get the permit for 2 years at once. But even though you will hardly get rejected when investing money, there are still a lot of hidden hazards on your way. You will be much safer with someone to consult you about multiple legal nuances, which are not obvious at first sight at all.
6. Move and adaptation. If one of the goals of your investment is to move to the country for permanent residence, sooner or later you will have to find yourself a home, arrange everything about the move, learn the language, go into the nuances of the tax system, choose the best schools, clinics, universities, and do plenty of other pleasant new things in order to settle down in this beautiful country. It would be perfect to have a person who could immediately give you open and honest information on all your doubts and concerns.
Let’s sum up. If you want to make a successful investment into Spanish property, you have to possess skills and talents of a brilliant businessman and negotiator, be an expert in the Kingdom’s traditions, know all the local dialects and be able to spend a long time in Spain. If you are this genius we can only wish you luck! But ordinary people will most probably have to use plan B: find a professional consultant who will lead through every stage of the process without letting you waste your time and money on the way.
Of course, if you don’t know anyone who can recommend the right person you can only rely on your intuition. Still, there are some key features that will help you identify a professional.
How to choose the right consultant:
- Work experience. This is the most important aspect. Find out how long this consultant has been working in this market and what is their main specialization. The best way is to find other customers’ recommendations and reviews. At least it can guarantee that this expert has already been in the fields. Chances are much higher that with an experienced professional you will achieve a very tangible and measurable success!
- Focus on locals. Ideally, the expert should live in Spain. As we explained above, when looking for property and processing transactions in a foreign country, it is vital to know the nuances of laws, the specifics of the market and other legal details. Local companies not only have all the necessary information and regularly update it, but also are experienced in dealing with Spanish governmental authorities, educational, medical and legal institutions and banks, which makes it multiple times easier to do the deal. When you don’t have to risk and constantly solve the eternal problem of saving time and distance everything will go smoother, faster and much more efficient!
- Look for a potential manager. If you want the return on your investment you will have to rent your property out, communicate with customers, sign contracts, etc. Simple logic: if your consultant has a prospect to become the manager of your property he or she will be more interested in choosing the most reliable and profitable object. It means you will have more careful selection of offers, more thorough check of documents and a flawless business plan.
- Range of services. The best decision is to work with a company that offers a full package of services. It is easy to see why. A professional team offering a complex approach is definitely not interested in cheating or leaving you to the mercy of fate. Normally, these agencies not only help you find the property but offer the full package of accompanying services - translation, paperwork, residence permit, etc. They also offer “adaptation period services”, which can potentially last for years, that is why these experts will never lose a stable customer and the company’s reputation for the sake of here-and-now profit.