How to Choose Real Estate for Investments: Tips for Investors

Spain remains one of the most sought-after destinations for real estate acquisition by international buyers. The reasons are obvious – a mild climate, a stable market, and accessible financing. This is especially relevant for those who are not ready to invest the entire sum at once. In this case, a mortgage in Spain for non-residents becomes a convenient and achievable tool for purchasing property.

The country’s financial system offers flexible property purchase schemes involving bank capital. Moreover, almost the same mortgage conditions in Spain are available for foreigners as for the country’s citizens, with some nuances.

How do Spanish financial structures work?

Most major banks in Spain willingly provide loans to foreign citizens. The loan is issued for a specific property selected and evaluated within the established procedure. Leading institutions in the mortgage segment include Banco Sabadell, BBVA, Santander, as well as Unicaja, Bankinter, and CaixaBank. These institutions have ready-made mortgage packages for foreign clients.

It is important to understand that each financial institution independently determines the requirements for borrowers. While general principles are maintained, the details may vary.

Key parameters for obtaining a mortgage in Spain for non-residents

The loan procedure for non-residents has its own rules: a larger initial payment, thorough verification of income sources, and a higher interest rate. The process is carried out in a clear and standard format. Below are the basic parameters defining the deal structure:

• term – from 5 to 30 years, most commonly up to 25 years;
• down payment – from 30% to 40% of the property value, depending on the type of property and client profile;
• interest rates – fixed or variable, averaging from 3.5% to 5.5% annually;
• loan currency – euro, with payments to an account in a Spanish bank;
• mandatory insurance – property and life of the borrower, in some cases – a loan condition.

The higher the transaction amount and the more stable the client’s financial history, the more favorable requirements the lender offers.

What will the borrower need?

Before submitting an application, it is necessary to gather the required set of documents and ensure that the purchased property meets the financial institution’s requirements. How to get a mortgage in Spain for a non-resident is a question directly related to the client’s readiness for income source verification and transparency. Each application is considered individually, but the basic list of provisions remains almost unchanged:

• mortgage documents – passport, NIE (foreigner identification number), income statement, tax return;
• bank statements – confirmation of solvency for the last 6-12 months;
• property appraisal – conducted by an accredited appraiser approved by the bank;
• preliminary purchase agreement – with specified value and transaction conditions;
• bank account – mandatory for fund transfers and loan repayment.

All documents must be translated into Spanish with notarization.

Who is eligible for a loan?

A mortgage in Spain for foreigners is suitable for both private buyers and investors planning to rent out the property. The highest activity is shown by citizens of the EU, the UK, CIS countries, and the Middle East. Income level is the main factor in decision-making, not citizenship.

It is possible to purchase apartments, villas, townhouses, or commercial spaces. During the evaluation stage, not only the property’s value is assessed but also its location, liquidity, and legal cleanliness.

Property acquisition with a loan as an investment

Buying property using a bank loan is not only a way to own property in Europe but also a profitable capital placement tool. Purchasing real estate in Spain with a mortgage allows non-residents to maintain liquidity, spreading expenses over a long period.

Moreover, thanks to the stable market, property prices demonstrate long-term growth, making credit investment particularly attractive for those who view real estate as an asset in their investment portfolio.

Choosing a lender

Key players in the market are banks with international reputation and experience in working with foreign clients. Among them are:

• Banco Sabadell – offers mortgage products with a fixed rate for 10 years;
• BBVA – emphasis on digital support and online application processing;
• Santander – a wide range of loans for foreigners and non-residents;
• Unicaja – advantageous offers with floating rates;
• Bankinter – convenient requirements for buyers without residency;
• CaixaBank – comprehensive packages considering rental, investments, and transaction support.

Comparing offers and obtaining preliminary approval are important steps before entering into a deal.

Mortgage in Spain for non-residents: the main points

A mortgage in Spain for non-residents is a transparent and accessible opportunity to acquire real estate in one of the most stable countries in Europe. Purchasing property with bank financing allows investment in housing without tying up all capital at once.

Formal requirements include basic mortgage documents, an initial payment, and income verification. Loan conditions depend on the financial institution and borrower status, but generally remain clear and comparable to European standards.

For those considering buying property abroad, a mortgage in Spain for foreigners is a convenient and advantageous option for personal residence, rental, or long-term investment. With a thoughtful approach and support from an experienced specialist, property acquisition becomes not a stress but a profitable and confident step towards European quality of life!

Investing in residential and commercial real estate on the Iberian Peninsula remains one of the most stable income-generating directions. Earning from property rentals in 2025 remains highly relevant due to the demand for short-term and long-term accommodation, stable tourist flow, and favorable cost-to-income ratio in Spain. However, the success of this model depends on management strategy, tax literacy, and market segment choice.

Real Estate Rental Yield in Spain: What Affects Income?

Income from property rental depends on location, season, rental format, owner’s legal status, and willingness to engage in operational processes. Earnings from property rentals in Spain in major cities and tourist areas can reach 5–8% annually with a well-chosen strategy. In less popular regions, the rate is lower — around 3–4%, but with a lower entry threshold.

Investors choose between short-term rentals aimed at tourists and long-term options for local and visiting professionals. Each model has its pros and cons. The first case requires active management, while the second requires stability and minimal involvement.

Key Expenses Impacting Net Income

Even with high property occupancy, actual profit depends on accurate cost calculations. Earnings from property rentals in Spain can significantly decrease if operational and legal costs are not taken into account. It is important to remember annual payments, including insurance, taxes, and property maintenance. Key expense items to consider include:

• annual property tax (IBI), ranging from 0.4-1.1% of the cadastral value;
• income tax, especially relevant for non-residents — up to 24% without deductions;
• property management and rental services (10 to 25% of revenue);
• utility bills and property insurance;
• depreciation expenses for repairs and furnishings.

As a result, net profitability can be reduced to 3-5% after deducting all mandatory payments. However, even in this case, the asset remains liquid and profitable, especially with rising property prices!

Rental Formats: Short-Term or Long-Term Lease?

The choice of strategy affects not only profit but also legal burden. Earnings from property rentals in Spain depend on how the property is used: under a tourist license or a long-term contract. Short-term formats are more profitable but require special permits and strict reporting.

The long-term option requires minimal involvement, reduces vacancy risks, but implies less flexibility in pricing. Passive income from real estate in Spain becomes a reality only with a reliable tenant and stable demand.

How to Legally Rent Property in Spain?

Registering the property and complying with local legislation are basic requirements for stable operation in the market. For tourist apartments, a license is required, which is issued by the municipality. It is also necessary to consider requirements for technical condition, fire safety, and guest registration.

Earnings from property rentals depend on how well the interaction process with tax authorities, banks, and utility services in Spain is organized. Non-residents must have a tax representative and regularly report income. Failure to comply with regulations can lead to administrative prosecution and sanctions!

Factors Influencing Demand and Pricing Policy

Properties in Barcelona, Madrid, Valencia, as well as on the Costa Blanca and Costa del Sol coasts, are the most sought after. Prices here are steadily increasing. Earnings from property rentals in Spain in such areas can cover investments within 10-15 years, and even faster with short-term rentals.

Price is influenced not only by area and location but also by the presence of repairs, furniture, internet connection, and quality of communal services. Current rates: 12-18 euros per m² for long-term rentals and 60-150 euros per day for short-term rentals. Seasonality and market saturation directly determine pricing flexibility.

How to Increase Earnings from Property Rentals in Spain?

To maximize income, it is necessary to carefully plan not only the purchase but also the subsequent operation. Below are practical recommendations for optimizing profitability:

• obtain a license for tourist rentals to increase rates;
• use a professional manager to increase occupancy;
• purchase a property with repairs and full furnishings;
• optimize taxation by creating a local company (SL);
• apply a flexible pricing strategy depending on the season;
• monitor reviews and ratings on platforms;
• regularly update interior and equipment to increase competitiveness.

These steps not only help stabilize earnings from property rentals in Spain but also scale the business without a sharp increase in expenses. Practice shows that even one properly managed property can generate a stable passive income of 800-1500 euros per month.

Risks and Limitations

Any investment involves risks. In the context of property ownership, these include non-paying tenants, property damage, seasonal demand fluctuations, or legislative changes. Earnings from property rentals in Spain can fluctuate depending on these factors. It is especially important to consider political decisions at the autonomy level — for example, Barcelona and the Balearic Islands restrict issuing licenses for short-term rentals.

Additional barriers arise when applying for a mortgage, especially for non-residents. Banks require a higher initial payment, and interest rates average 4-5% annually. Without careful investment planning, an investor may face low profitability or delayed return on investments.

Conclusion

Earnings from property rentals in Spain in 2025 remain one of the most stable income formation strategies in euros. With compliance with all rules, expense tracking, and working with licensed real estate, stable profits at a level of 4-8% annually are achievable.

For an investor, this means not only passive income but also a long-term asset with capital growth potential. The flexible market, high liquidity, and tourist attractiveness of the country make rental profitability competitive compared to other European destinations.