Is it worth buying or renting

Share experience regarding ownership of property and/or living in Portugal.

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OnionBhaji
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Is it worth buying or renting

Post by OnionBhaji » Wed Dec 03, 2014 8:11 am

Is it worth buying a property in Portugal i.e. has the economic climate reduced property prices to a level where it would be worth buying rather than long term letting,say for 4-6 months a year?

shanagarry
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Re: Is it worth buying or renting

Post by shanagarry » Wed Dec 03, 2014 9:46 pm

What a great topic - and one as a former Cvo property owner who regularly goes through the 'will we - won't we' return (to live) conundrum - I will be interested to read the views expressed.

It is unlikely we will buy in Portugal again - due mainly to age and as well as the cost and regulatory burden of ownership. The parallel topic on this Forum where the burden of compliance for absentee landlords/owners brought about by the Portuguese regulatory requirements is one I would rather others dealt with. During our 23 years of property (3 properties) ownership we didn't have the pressure/cost that prevails at present and I'm fairly sure break-even is something many landlords dream about.

Every new post on the 'Reporting Income' topic appears to suggest another demand from the authorities with the attendant cost - none of which is insignificant. We came back and rented a few times since leaving and found the cost to do that compared with ownership to be a pleasant change. For us, should we return, it will be through a rental arrangement with a payment somewhere in the region of €1,200 per month (out of season) - is an practical and flexible alternative.

If you have the money to invest in the purchase of a property - regardless of the price - you need to factor in the taxes and compliance costs and given that you are indicating a 4-6 months occupancy - I don't believe the rental income on the other months (assuming you rent it) will give you the return on your investment. If you are going to buy using a mortgage - it's a non starter - in the short to medium term.

Having said all that - if you can comfortably take advantage of the market conditions and are not intending to let it - go for it :D

RichardHenshall
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Re: Is it worth buying or renting

Post by RichardHenshall » Thu Dec 04, 2014 1:24 am

shanagarry wrote:What a great topic - and one as a former Cvo property owner who regularly goes through the 'will we - won't we' return (to live) conundrum - I will be interested to read the views expressed.

It is unlikely we will buy in Portugal again - due mainly to age and as well as the cost and regulatory burden of ownership. ...
The regulatory burden of ownership is that you have to pay your annual IMI account in one, two or three instalments, depending on the value of your property. That is all. Electricity, water, telephone, internet, cleaning, security etc are all optional. Taxes (other than IMI) are not an issue.
shanagarry wrote:... During our 23 years of property (3 properties) ownership we didn't have the pressure/cost that prevails at present and I'm fairly sure break-even is something many landlords dream about. ...
My highlighting. Nobody who owns property breaks even unless they have sufficient relevant income. I assume you are referring to (and may have been one of) the many non-compliant 'landlords' that have finally motivated the authorities to make life difficult for the rest(/few) of us who want to operate within the rules.

widge
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Re: Is it worth buying or renting

Post by widge » Thu Dec 04, 2014 8:05 am

OnionBhaji wrote:Is it worth buying a property in Portugal i.e. has the economic climate reduced property prices to a level where it would be worth buying rather than long term letting,say for 4-6 months a year?
Don't do either - go on a caribbean cruise or tour the USA but whatever you do don't come to Portugal.

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Re: Is it worth buying or renting

Post by shanagarry » Thu Dec 04, 2014 11:08 am

RichardHenshall wrote:I assume you are referring to (and may have been one of) the many non-compliant 'landlords' that have finally motivated the authorities to make life difficult for the rest(/few) of us who want to operate within the rules.
In our later years in Carvoeiro - we did not rent - it was more trouble than it was worth. When we did rent - there was no licensing requirement or bureaucratic interference.

You omitted to mention the taxes on the rental income - the fees to the management company, the fiscal representative and the excessive costs of the utilities as well as your time to deal with it - all of which require serious attention.
widge wrote:Don't do either - go on a caribbean cruise or tour the USA but whatever you do don't come to Portugal
Here's the wise words of someone who does know what he's talking about.

One final thought to OnionBhaji - your reference to the 'Economic Climate' and "Reduced Property Prices' needs to be carefully researched. When I look at the property websites to see where prices are in Cvo I don't see too many 'bargains'. Anybody who bought at the top of the market at an inflated price and can afford to stay with it - will do and will not be rushing out to shave huge chunks of equity off their asset. For the less fortunate who don't have the luxury of wealth/income to support the upkeep of an 'investment' property in Portugal - it's a very different story. Nevertheless, any liquidation process has a duty of care to secure the best price and apart from some mega-properties in the Golden Triangle being 'sold' for a fraction of their perceived value - I don't believe such opportunities exist in Cvo - but I could be wrong :wink:
Last edited by shanagarry on Thu Dec 04, 2014 12:15 pm, edited 1 time in total.

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Re: Is it worth buying or renting

Post by laserblazer » Thu Dec 04, 2014 11:39 am

Well we just about break-even on our place and contribute towards employment for a fair few Portuguese. We don't go out in the summer, so we get good bookings at top wack and we have use of the place in the colder months.

maccasa
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Re: Is it worth buying or renting

Post by maccasa » Thu Dec 04, 2014 11:55 am

I take it that's Droitwich you're talking about? still using the illegal Portuguese maid, gardener, window cleaner etc obviously :D :D

RichardHenshall
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Re: Is it worth buying or renting

Post by RichardHenshall » Thu Dec 04, 2014 12:01 pm

shanagarry wrote:... You omitted to mention the taxes on the rental income - the fees to the management company, the fiscal representative and the excessive costs of the utilities as well your time to deal with it - all of which require serious attention. ...
I was trying to make the point that these things are not part of the regulatory burden of ownership. They are part of the burden of doing business.

I don't view ownership of property (anywhere) as an investment. It's a burden that I choose to bear. If I can lighten the overall burden by renting when not in use, like laserblazer, so much the better.

shanagarry
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Re: Is it worth buying or renting

Post by shanagarry » Thu Dec 04, 2014 12:13 pm

I believe OnionBhaji has got a good cross section of opinion here.

It would be interesting to know what s/he decides to do :D

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Re: Is it worth buying or renting

Post by laserblazer » Thu Dec 04, 2014 12:29 pm

maccasa wrote:I take it that's Droitwich you're talking about? still using the illegal Portuguese maid, gardener, window cleaner etc obviously :D :D
You should know, you drop them off in an old minibus every morning :)
It would be interesting to know what s/he decides to do
Don't hold your breath :)

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Re: Is it worth buying or renting

Post by djprescott » Thu Dec 04, 2014 2:15 pm

For me it is all about whether you need to rent out your property to afford to buy a place. I have never rented out and I don't intend to. If we got to the point where we needed to rent out to fund the property I would most probably sell up!

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Re: Is it worth buying or renting

Post by dennisg » Thu Dec 04, 2014 6:33 pm

Like Lazerblaser we only come out in the winter months when it is usually several degrees warmer than the UK. Being retired we enjoy our summers in England, and our house on Rocha Brava is rented out by the management a lot of the time. The income pays for the annual maintenance and running costs, and we have used the money to upgrade i.e. air-conditioning, new TV etc.
We have no hassle as RB take care of all cleaning and maintenance and they look after our money - we closed our bank account in view of the monthly charges imposed - and we can draw on that if we wish. They also complete and file our tax forms (for a small fee) and pay all bills on our behalf.
If we wanted to sell, which we don't, we would have to pay tax on the profits. Similar properties on RB are still selling for more than we paid 12 years ago.
If you are going to buy make sure it is on a well established site with a first class management.

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Re: Is it worth buying or renting

Post by sam » Sat Dec 06, 2014 9:43 am

widge wrote:
OnionBhaji wrote:Is it worth buying a property in Portugal i.e. has the economic climate reduced property prices to a level where it would be worth buying rather than long term letting,say for 4-6 months a year?
Don't do either - go on a caribbean cruise or tour the USA but whatever you do don't come to Portugal.
Unfortunately, if it is who I think it is then they are already in CVO :?: :!:

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