Investing in properties that require refurbishment might seem like a daunting prospect at first, but it can be a highly rewarding and profitable venture. While these properties in Sotogrande may initially appear rundown or neglected, they possess untapped potential and present a unique opportunity for in-the-know investors. In this blog, I will explore why properties in need of renovation can be a wise investment choice and how they can yield substantial returns.
Lower Purchase Price
One of the principal advantages of investing in properties in need of renovation is the lower purchase price compared to fully renovated properties in the same area. Sotogrande Costa is a good example. Buyers have secured properties on Paseo del Parque for as little as one million euros, and once refurbished to a high standard, sold them for two and a half. Such properties were no longer fit for purpose and were significantly discounted, allowing the investor a more affordable entry level. This initial cost savings opens up opportunities for higher profit margins when the property is eventually sold at a later date.
Value Creation
Refurbishing a property therefore allows investors to create value and renovate the property to current market standards and demands. By implementing these improvements, such as modernizing the kitchen, upgrading bathrooms, renewing windows, installing green underfloor heating, opening old-style pokey rooms, or enhancing the property’s visual appeal, investors can increase the property’s market value substantially. This increased value presents the potential for higher resale pricing, leading to greater returns on investment. With many plots, particularly in the older and highly sought-after Kings and Queens area of Sotogrande, now being of greater value than the old villas built on them, a patient investor will for sure find options turning up on the market.
Less Competition
Properties in need of refurbishment often deter many applicants due to the work involved and the cost to restore. This lack of competition can work to the advantage of clever investors. With fewer interested buyers, investors have a better chance of negotiating a favourable purchase price and securing a promising property that others may overlook. Sotogrande being 60 years old this year has property located on the best plots that were only used during the summer months. Today there is occasionally some competition amongst second and even third generations of families who only want to buy in certain parts of the resort but mostly in the Kings and Queens area.
Flexibility in Design
Investing in a property requiring renovation grants investors the flexibility to customize the design and layout according to their target market. Additionally, most of the older properties in Sotogrande were built for summer use and with architecture that served the time and practice of the day. Today creative freedom enables investors to make strategic decisions that align with current trends and buyer preferences, for example, big windows allowing for sunlight light but at the same time with technology that stops UV rays and excess heat and so leading to higher desirability and increased market demand. The ability to adapt the property to suit the needs of potential buyers can result in quicker sales and better financial returns.
Properties in need of renovation in Sotogrande present a compelling investment opportunity for those willing to take on the challenge. These properties offer lower entry costs as they may no longer be fit for purpose in today’s market, there is potential for value creation, but not many are willing to take on the challenge thus the reduced competition, huge options for design flexibility, and even favourable financing options from banks. While investing in such properties requires careful planning, patience, and a strategic vision, the rewards can be significant.
Charlie.
