A property on Majorca – buy or rent long-term? What must be considered in the decision? What special features are taken into account? What options does the Spanish real estate and rental law give?
Who is at the decision to live like him - even in the house purchased or rather weigh in a rented flat - the must. Is it worth the purchase and exceeds the value added at the end of the burden of interest and principal? Or not worth it provided a solid investment and a property?
Flat or not flat - that is the question. It is the key issue of private provision, is it actually beneficial long-term rich to buy a house or apartment, or "is not on the long run" a housing for rent cheaper?
Property or investment
There are good reasons are there for both cases. Many of the arguments at first sight for a property: Interest rates are currently (summer 2009) cheap, a construction loan can usually be paid off in 25-30 years, and thereafter rent-free until the end of life beckons.
As a tenant, the other one looks at the potential returns on investment market. For who has not built, may pay less in rent than the buyer to removal of the loans, at least the compound interest of the construction loan, the tenant can create as non spent.
Calculate costs of buying
If you bought a house deals with several types of costs:
• the direct purchase cost and the extra costs such as real estate, the estate agent or notary fees and fees for public land register entry.
• the annual cost of maintenance, such as riparian reserve for costs or repairs.
• the available resources that can contribute in the financing, including any accumulated savings deposits with claims of lower loan interest rates.
• the current interest rate for a home loan.
• the timing of 10, 20 or more years.
• and finally that the amount of credit rate per year on a timeline.
Calculate the cost of rent
Renting a house or an apartment is simply by the possibility of change flexible: You can move if you need more space or if you have less space requirements, such as when children leave the house. To get a solid comparison of buy or rent for the future, they should alternatively, the rent for a house or apartment are calculated on a comparable period: Calculates the sum of the estimated annual basic rent of a leased property, so
• the amount of the fixed monthly rental payments and
• the estimated annual rent increases
• extrapolated to the end to paying rent on a time axis.
If the financing of a house construction or purchase is significantly cheaper than housing for rent, you should look carefully: How long is actually the fixation?
Many consider variable
The central question is: how much equity you have at the beginning of both bills? How will the investment in developing tenant and how the property develops in the buyer? A model calculation: buyers and tenants living in about the same size, comparable homes, the two begin their own savings, € 50 000.
The buyer pays for a 100-square-foot house 200 000 €, plus 10 percent extra cost (20,000 €) for real estate, a broker and the notary. The value of the house is a constant percentage each year. To purchase a logical construction loan is taken from 170,000 €, which is remunerated through 30 years with 4 percent and is amortized annually with 2 percent. The house is of course also other maintenance costs that an owner, but not a tenant must pay, here are a further 1,000 € a year included.
The tenant pays the other hand, Rent € 791 per month, ie € 7.91 Rent per square meter. The basic rent increases each year compared with the value the buyer is one percent. His not-so money spent their savings plus the unpaid sums shall eradication of tenants conservative with their bank or capital market for four percent interest.
Result 1: advantage for the buyer
By the ninth year of the tenant has more wealth, then the tide turns for the buyer. Example Results: The buyer has paid off the debt after 28 years, his fortune is 250,000 euros, including an appreciation of the house of one percent per year.
The lessee shall submit to the 50,000, plus the repayment of the unpaid buyer. Conservative interest rate of four percent and net assets of the savings be increased in 28 years to 154 548 €. But look how hard the variables show more examples: If we adopt instead a percentage increase in value when buying property to zero percent, while the house is paid off after 28 years also, but just worth only 200,000 €. The tenant has continued to € 154 548 on the high ledge.
Result 2: significant advantage for tenants
Even if the tenant also would have no rent increases, deposits would be at 204 683 €. We see the leverage of the variables have enormous influence on the performance of both systems.
Would turn out even more clearly the income of a tenant unless he rents Hamburger (7.91 € / sqm), but rent the Saarland (5.04 € / sqm) paid: after 28 years then get a credit of as much as the tenant write 352 881 €, with the message: Small lever - great effect! Prerequisite course, always that the money is completely safe and earn interest over the whole period.
Uncertainties in mind
A real estate has more uncertainties about the performance of the property on the site that ex post financing of modernization, such as the heating of the roof or around riparian fees for road works, which go so easily into the 10.000ende. For the purchase of property there are three main arguments: location, location and location: How is the value of my property in 20 or 30 years in the exact place? In assessing the situation of a long flat note:
• The economic and demographic development in the City.
• Rehabilitation needs in 20 years.
• space requirements now and in the future.
• What is the age appropriate property?
• The future of inflation or even deflation rate may play a role.
Everyone has to decide after weighing possible number of realistic assumptions and yourself: Is it worth buying or not? Whether the assumptions are in, you can probably ignore after a few years whether all the bills go up certainly until the end.
The website of real estate agents Inmobiliaria y Promociones AM Property Mallorca 400 properties in Mallorca are presented. You can not only differ from purchase homes and long term rentals in Mallorca, but also for specific types of property such as villas, villa, apartment, land or commercial property, as well as looking for locations.