Top 10 Tips to Buy an Apartment in Madrid

The Holy Grail: the perfect flat !

The Holy Grail: the perfect apartment to buy in Madrid !

If you are planning to buy an appartment in Madrid, I recommend you follow these 10 tips:

 

1)   Location, Location, Location

Choose your neighbourhood well, and make sure it is one that suits your lifestyle and budget. Prices change considerably depending on the area in Madrid; the average price per square meter in Madrid was 3478 € as of the last quarter of 2011. Housing in the cheapest neighbourhood is about 40 percent cheaper than housing in a moderately priced (under 2000 €/m2) neighbourhood, and housing in the most exclusive area 40 percent more expensive (around 4800 €/m2).

Map Tool: best neighbourhoods for expats in Madrid, with descriptions, typical prices and links to photos.

 

2)  Plan for extra costs for 7-12% on top of price

Be aware that on top of the price, you will have to pay first, either 6 percent for second-hand (“Patrimonial Transmission Taxes) or 10 percent (VAT)for newly built properties. Additionally other legal and administrative expenses related to the purchase and the mortgage will amount to costs equivalent to 1 to 3 percent of the property price.

For the low-down on all costs to expect: http://moving2madrid.com/cost-apartment-sale/

 

3)  Buy & Hold – Don’t Flip

and buy now only if you plan to hold the property for more than a minimum of five years. It’s helpful to use the New York Times calculator to evaluate the minimum number of years you need to hold before selling in order for buying to be a better financial option than renting: http://www.nytimes.com/interactive/business/buy-rent-calculator.html

 

4)   Beware of Real estate agents

They do not work for you, but for the seller. They usually charge commission to the seller: 6 percent is the average. This is different to other parts of Spain. However, some agencies, such as Red Pisos, charge 3 percent to each party, the seller and the buyer. Just be aware that, in most cases, you will not have to pay commission, but it may occur.

 

 

How can I find an apartment like this in Madrid ?

How can I find an apartment like this in Madrid ?

5)  Estimate conservatively the rental returns

Take into account that if you have a refurbished and modern flat in the centre of Madrid, you will be able to easily rent if for days or weeks to tourists for good money. This can be a good way to make extra cash while travelling, especially for expats who are planning to leave their flat empty for months.

 

6)   Negotiate

All real estate professionals know that average advertised prices are around 20 percent higher than the final sale price. To negotiate well in Madrid, you need to be patient, have alternatives and be prepared.

 

7)  Plan long-term if you have family or family plans

If you have kids, be aware that all quality schools are in the northern and north-western part of Madrid, which tends to be, like in nearly all capital cities in Europe, the poshest part of the city.  Look at these maps to get an understanding of :

 

  1.  where the best schools for expat kids are
  2. where the best family friendly neighbourhoods are

 

8)  Either have minimum 30% down, or get the mortgage from your country

Always compare mortgages you can get in Spain to what you could get in your home country. Spanish banks are still very cautious with mortgages, and charge high interest rates.

 

9)   Get help

you will need support, and keep in mind that real estate agents are not your friend – they only are business people working to sell houses. It’s recommended that expats use the services of a flathunter: a professional who can help get the best property at the best price. These service providers will ask for a percentage-based commission or fixed fee. Disclosure: Moving2Madrid is the one of only flathunters in Madrid and the only one focused on expats, with the lowest fee in the market (3%) and the best service: flathunting + relocation included in the same fee.

 

10)    Get a lawyer

Finally, and just to be on the safe side of things, get a lawyer – you will need a local trustworthy lawyer to make the buying process easier and stress-free. If you use a flathunter, they should recommend a good professional from the start.

 

If you need help to buy the best property, do not hesitate to send us an email !

Yours Madridly,
+Pierre-Alban Waters

 

This post is also available in: French

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2 Responses to “Top 10 Tips to Buy an Apartment in Madrid”

  1. Marc A. Donald May 11, 2013 at 13:44 #

    Thank you Pierre for this article, I would like to add a small tip while buying a home which is asking about future plans. Do research about the area that you’ll buy your property in or ask your agent because real-estate agents are aware of any future plans that will happen in any area they’re selling property in because they use it as an advantage for the villa or apartment to increase its price. Future plans may be a hospital, bus station, or even a supermarket that is planning to open.

    • Pierre Waters May 11, 2013 at 17:47 #

      You are right, it’s something to take into account. This is part of the financial, legal and architectural checks we complete with lawyers and architect. In Madrid though, the most common is not new plans, but protection of historic buildings which can be very limiting if refurbishing.

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