How to invest in real estate in Valencia

Valencia, Spain's third-largest city, is known for its beautiful beaches, rich culture and a dynamic real estate market. Therefore, for investors interested in the Spanish real estate sector, Valencia is an attractive market to invest in. There are several ways to invest in property in Valencia, including the most popular varieties of real estate bonds and buying property yourself. In this article, we compare these two forms of investing.

What are real estate bonds?

Real estate bonds are debt instruments issued by real estate companies or developers to raise capital for projects. As an investor, you are essentially lending money to the real estate company, which in turn pays interest over the term of the bond. At the end of the term, you get your original investment back. Through platforms such as Valvest, you can invest in real estate bonds as little as €100, making this form of investment accessible to a wider audience.

Advantages of real estate bonds

• Stable income: Real estate bonds offer regular interest income, which can be attractive to investors looking for predictable cash flows. In addition, real estate offers security of payment through the rent that flows back from it.
• Lower entry threshold: Compared to buying real estate yourself, the capital investment required is much lower. At Valvest, for example, you can invest as little as €100, instead of tens of thousands of euros.
• Diversification: Investing in real estate bonds allows you to diversify your portfolio without owning real estate directly.
• Accessibility through platforms: Platforms like Valvest make it easy to invest in different real estate projects, increasing accessibility and transparency.
• Passive income: Real estate bonds require no involvement compared to property management, ideal for investors who want to spend their time elsewhere.

Disadvantages of real estate bonds

• Limited return: Returns can be lower than those of buying real estate because of management costs.
• Risk of default: If the real estate company runs into financial trouble, there is a risk that you may not get your investment back in full. Fortunately, this is often covered by various collateral. Read more about how a platform like Valvest handles this here.
• No ownership rights: As a bondholder, you have no rights to the underlying property or its possible increase in value. Fortunately, Valvest also takes care of this with a first-right mortgage.

Buying property in Valencia

Buying property in Valencia can be interesting if, in addition to the stable income from rental income, you would like to stay there yourself and also profit from the increase in value. To give you a better idea of the advantages and disadvantages, we have listed them below.

Advantages of buying real estate yourself

• Potentially high return: The real estate market in Valencia has experienced strong growth in recent years, which can bring a significant increase in value if you know what you are doing. For this, however, you need to have a good understanding of how the market works and speaking the language is a must so as not to get ripped off.
• Rental income: Buying property gives you a stable source of income through rentals. You just need to make sure there is always a tenant.
• Ownership and control: As the owner, you have complete control over the property and can make decisions about maintenance, rentals and any improvements. In addition, you can stay there yourself for work or vacations, this does come at the expense of rental income.

Disadvantages of buying property

• High initial cost: Buying property often requires a significant capital investment, including purchase costs, taxes and possible renovations.
• Management and maintenance: Managing a real estate property can be time-consuming and expensive, especially if you have to deal with problem tenants or unexpected maintenance. In addition, our experience has shown that Spanish developers are often unreliable in their schedules and the quality of their work, so pay close attention to this.
• Market risk: The real estate market can fluctuate and decreases in value can have a negative effect on your investment. Then, to make your money back, you have to hold the property longer than originally planned.
• Difficult to get into: As a beginning investor in Spain, you often have no idea where to start. You don't know which neighborhoods are good and what legislation you have to take into account. In addition, there is a high chance of being scammed by estate agents or developers.

Conclusion

Based on this comparison, hopefully you can make a better decision whether you want to buy real estate in Valencia yourself or prefer to invest via real estate bonds. If real estate bonds are your preference, then you have come to the right place. You can get in from as little as €100 and benefit from attractive interest rates of up to 9.75% per year. Visit our platform and discover the advantages and possible risks.