You are considering buying a property in Madrid.
Do you feel overwhelmed with all the information available, and do not know where to start ?
Then I will give you now the 3 essential steps to start with:
- Prepare your finances,
- design your lifestyle
- Do the reality check.
I keep it as simple and realistic as possible. If you need more details or have questions along the way, follow the links, search on this website or just send us an email ! with your questions.
1. Prepare your finances
The first step of all, is the less romantic: ensure that you will have the money to support your project. Planning and preparation are key to a successful purchase. You will need to have a clear confirmation of your mortgage and finances to confirm your budget and possibilities.
If you need a mortgage, you can either request one from a bank in your country of origin with branches in Spain, or request a non-resident mortgage to a Spanish bank, the latter being the easiest option in most cases in our experience. We explain how to get this non-resident mortgage here.
The real cost of buying
Be careful to include all costs when calculating your expenses.
To calculate the monthly housing costs, do not forget to add to mortgage payments, 15 to 20 % just to give you a rough idea.
Indeed, you need to include:
– Madrid Property Tax or IBI (Impuesto de Bienes Inmuebles): 0,60% – 0,80 % every year of the value of the property,
– House insurance: around 200 € a year.
To calculate the final amount to pay when buying the property, you have to add on top of the property price 10 to 15 % in buying costs.
Finally, you should give yourself a margin for maintenance, upgrades and furniture.
You should now have a final all-included maximum property price you can afford.
2. Understand what is best for your goals
Do you really know the kind of property you want ? In which neighborhood ?
Well, in most cases, we first go with one neighborhood and forget to take into account less obvious options, which may well be a better neighborhood in the end !
Or what kind of property ? How do you optimize to not fall in the trap of acting like “standard buyers”, and not getting the best for your money ?
The first thing I recommend therefore is to define what would be your ideal purchase, and the ideal process.
What is your main goal – rental return or capital appreciation ? or a mix with lifestyle as you might want to first invest and then maybe visit this apartment from time to time ?
The next part is where the rubber hits the road.
3. The reality check
The first check is to divide your maximum property price by the number of m2 you need.
If you do not know how many m2 you need, a first guess is 40 m2 + 30m2 per room. For instance, for a 2 bedroom apartment, 100 m2 is a good start.
You will then get a price per m2. This will allow us to see what kind of neighborhoods you can afford:
– 5000 € / m2 and above: the sky is your limit. The most exclusive neighborhoods like Salamanca, newly built apartments in the centre and penthouses are within your budget.
– 4000 – 5000 € / m2 : you can afford quality apartments in the centre of Madrid, in Chamberi, but not the most modern, and it might be harder to buy in the most exclusive neighborhoods. You can afford new build several stops from the centre, with terraces for instance.
4000 € / m2 is the average in Madrid Capital, which is the zone where you have metro stops more or less .
– 3000 – 4000 € / m2: the only solution in the centre of Madrid is Lavapies and you will need to search and negotiate very well. You can afford nice modern apartments a few metro stops from the “centro” district of Madrid.
– 2000 – 3000 € / m2: the suburbs of Madrid, with less character but more modern apartments. You will need to optimize the budget and prioritize price over other needs.
With these first 3 elements (budget, lifestyle and reality check), you are now able to take your first decisions, and above all, read, research and prepare.
Do send us an email if you want some help to get as much of the lifestyle you love for the budget you have !
Pierre – Moving2Madrid