Insights

Investing in a Rental Property: What You Need to Know

The Costa del Sol has long been a popular destination for property investors, with its sunny climate, stunning coastline, and vibrant culture attracting visitors year-round. If you're considering buying a property for rental income, here are some key points to keep in mind.

Seasonal Demand and Income Fluctuations

The rental market on the Costa del Sol sees significant differences between high and low seasons. High season typically runs from June to September, with average occupancy rates reaching 80-90%, and rental prices often double or even triple compared to the quieter months. For example, a two-bedroom apartment in a prime location might fetch €1,500–€2,000 per week during summer but drop to €600–€800 per month in winter.

This seasonality means that while summer months can generate substantial income, you'll need to plan for quieter periods. Diversifying your rental strategy by appealing to long-term renters during the low season, such as digital nomads or retirees, can help bridge the gap.

Extra Costs to Budget For:

Owning and managing a rental property comes with additional expenses that should be factored into your budget:

Community Fees

If you purchase a property in a complex or gated community, monthly community fees are required. These cover shared amenities like pools, gardens, and security, and typically range from €150 to €350 per month, depending on the property’s location and the services provided.

IBI (Property Tax)

The annual Impuesto sobre Bienes Inmuebles (IBI) is a property tax based on the property’s cadastral value. On average, this ranges from €300 to €1,000 annually but can be higher for luxury properties or those in prime locations.

Tourist License and Taxes

In Andalusia, you need a tourist license to legally rent out short-term properties. Ensure you comply with local tax obligations, including declaring rental income. Non-resident property owners, for example, pay a 19% tax on rental income after deductible expenses.

Marketing and Booking Platforms

Platforms like Booking.com or Airbnb charge service fees, typically around 15-20% of your booking income. High-quality photos and engaging descriptions are a must, which might require hiring a professional photographer (€100–€300) and potentially investing in marketing materials.

Utilities and Amenities

High-speed internet, air conditioning, and satellite TV are often expected by renters. These can add €100–€300 to your monthly expenses.

Cleaning and Maintenance

Between bookings, you'll need professional cleaning services, which can cost €60–€150 per turnover, depending on the size of the property. Regular maintenance is also essential to keep the property in top condition.

Maximizing Your Investment

To make your rental property stand out:

  • Choose a location with high demand, such as beachfront areas or properties near golf resorts.

  • Offer unique amenities like heated pool, co-working space, gym, on-site restaurant, nearby sport facilities or outdoor entertainment space.

  • Provide excellent customer service, including quick responses to inquiries and helpful local tips.

Investing in a rental property on the Costa del Sol can be highly rewarding if managed carefully. By understanding the nuances of the market and planning for seasonal fluctuations and costs, you can enjoy steady returns while owning a slice of paradise.

Our Top Picks for Rental Investment Properties

Here are a few standout properties currently on the market that we believe are excellent choices for rental investments: