When deciding where to purchase a rental investment property in Cadiz, and anywhere else for that matter, there are several factors you should consider.
In this article we will look at three of them:
- Purchase Price vs Expected Rental Price
- Targetting your Ideal Guests
- The Size of the Property
Before looking at some of the factors you should consider, let us explain why you should purchase a rental investment property in Cadiz …
Andalucía is the second most popular tourist destination in Spain, and Spain is the third most popular tourist destination in the world. As Malaga and the Costa del Sol property prices skyrocket as it becomes saturated and overpopulated, particularly due to the recent influx of big tech companies and the employees for numerous large call centres, not to mention the influx of “digital nomads”, the savvy traveler will look elsewhere.
Cadiz and the Costa del la Luz have been the favoured summer destination for many Spaniards for decades and are becoming more and more popular with international travelers, especially in the out-of-season period. Thanks to the great climate, fabulous outdoor lifestyle, stunning countryside, whitewashed villages, fabulous sandy beaches, and waves, the Cadiz province has a lot to offer. And let’s not forget to mention gastronomy and wine!
Cadiz has a mild climate, perfect for taking advantage of its miles of pristine beaches. The hottest period of the year is during the summer months of July and August when the mean temperature is around 80 degrees (26 C). The coldest it gets in Cadiz is a mean temperature in the lower 50s in the months of December and January. Cadiz gets about 300 days and 3200 hours of sunshine per year. The wettest months are in the winter. Temperatures are hot enough for sunbathing and swimming from May through October, although surfing and diving are possible year-round with a wetsuit.
Ref: Tripadvisor: https://www.tripadvisor.com/Travel-g187432-s208/Cadiz:Spain:Weather.And.When.To.Go.html
In a previous article, we looked at factors to consider when purchasing a permanent home or holiday home for personal use so today we will focus on purely a rental investment property in Cadiz.
Tips to Consider When Purchasing a Rental Investment Property in Cadiz:
Purchase Price vs Expected Rental Price
When considering purchasing a rental property in Cadiz, it is important to take into account the running expenses*, and monthly mortgage payments (if you have a mortgage), when setting rental prices. Especially if this is purely a rental investment property.
The goal is to have the high season rental income, typically from June to September, cover the yearly mortgage payments. Any other weeks that you rent out the property, should then cover expenses.
When setting your rental rates, a rule of thumb is that your high-season weekly rates will be roughly the same as what a long-term rental might achieve per month.
While this may take a few years to achieve, buying a rental investment property in Cadiz means you have the potential for all-year-round bookings which leads to a quicker return on your investment.
If you are looking for a rental investment but also plan to use the property yourself, you should expect to only use the property in between paying guests and to carry out maintenance checks, replacing damaged goods, stained towels, and bed sheets. (Although a good property management company can also take care of that for you).
*Some expenses to remember are: Community fees, IBI, basura, cleaning fees, income tax (remember none EU citizens pay a higher rate), pool and garden monthly maintenance, sales agency fees (even Airbnb, etc charge fees!), electricity and other utility bills, allow a buffer for general maintenance and upkeep and replacement of items over the years.
Your ideal guests should influence the location and type of property you purchase as a rental investment property in Cadiz
Who are you targeting as your ideal guest? What will they appreciate when they visit your property? Deciding this from the outset helps you to achieve more rentals and hence more income from your investment.
These are some of the types of guests you may choose to target:
- Young Couples
- Retired Couples
- Digital Nomads/Business Travellers
When targeting families, it is important to pick a safe environment, away from busy roads, perhaps in a closed urbanisation, with a fully enclosed garden and maybe a pool. Countryside detached villas in a laid-back, tranquil environment, but within close proximity to the beach and amenities, such as supermarkets and restaurants are extremely popular.
Ideal locations are Hozanejos, La Coquina, Los Gallos, and several other inland areas of Chiclana de La Frontera . In contrast to the beachfront resorts, here you get more for your money in terms of property size, and you have everything on the doorstep that you need, including the stunning La Barrosa beach within 15 minutes.
If you are targeting young couples without children, you might want to look at busier areas, with a more upbeat ambiance. Close to bars, restaurants, and nightlife. Areas such as La Barrosa, Novo Sancti Petri, and Conil de la Frontera should be considered. Studios, apartments, and townhouses with communal gardens, pools, and sports facilities are ideal.
Older travellers often look for a more peaceful area in the busier months, yet with amenities around them, so they don’t have to travel too far. This age group is also known to rent more centrally located properties in the out-of-season months. The Chiclana area is becoming popular with Eastern Europeans who choose to enjoy the milder winter climate we enjoy here. If your rental property is properly equipped, you can earn income through the winter months also.
The business travel market, particularly due to the upsurge of the so-called digital nomad, is also an important market. More and more business travellers are choosing Airbnb and vacation rental accommodation over hotel stays, as they appreciate their flexibility, space, and comfort. It goes without saying that if you are targeting this sector, aswell as comfort, reliable wifi is essential!
No matter who you are targeting as your ideal guest, other important factors to think about when choosing your holiday rental investment property in Cadiz are breathtaking views, distances to the airport, and activities: restaurants, beach, shops, golf, parks, water parks, etc. Remember to think about your ideal guest. What will attract them?
Size Matters for your rental investment property in Cadiz
The size of the property you choose will depend on various factors:
- Your purchase budget
- Ideal guest profile
- Local regulations
If you are looking to invest in a rental property in Cadiz, the size of the property you choose will depend on your budget and the profile of your ideal guests. These are matters we can discuss and negotiate when we start your property search.
However, one of these factors is not negotiable …
To legally rent out a short-term rental property in Spain, you need to apply for a tourist licence. In Cadiz, Andalucía, you are only allowed to register a property for a maximum of 15 guests, or 6 bedrooms. So, bear this in mind when you are tempted by a larger, great value-for-money property.
Don’t worry, if your investment property does not already have a tourist licence, we will advise you whether a licence can be obtained before you spend any money and we will help you apply for one.
The Next Step?
Get in touch with our Cadiz Property Finder team and we’ll help you find your ideal rental investment property in Cadiz and the Costa de la Luz.