We show you how to calculate the return on a property in Moraira: return from sales and return from renting.
Investing in property in Moraira is a profitable operation. Regardless of whether you are thinking of buying to rent or buying to sell at a later date, the return on property in Moraira is one of the highest in Costa Blanca.
Moreover, investing in real estate is an excellent way to access good opportunities and make medium to long-term gains during a recession such as the current one.
But, what sort of return can we expect from a property in Moraira? What will be more profitable: to sell or to rent? To calculate which option will bring us a greater financial benefit, two elements must be taken into account: the price we could sell our property for and the price we could rent it for.
Return from sales in Moraira
According to the portal Idealista, in October 2022 the average price per square metre in Moraira was 3,504 euros. This means that, if we sell a property of around 90 m2 in this municipality, the selling price could reach an average of 315,360 euros.
Let’s imagine that we bought this property 7 years ago. According to the same source of information, the average price per square metre in Moraira in October 2015 was 2,377 euros. This means that the purchase price of our property at that time would be around 213,930 euros.
With data like this, what return could we expect from selling our flat in Moraira? To calculate it, we would have to apply the following formula:
1st Calculate the sales price – expenses
To calculate the return from the sale of a flat in Moraira, we would have to subtract all the expenses that we are going to have to assume when processing our property from the price we are selling it for, in other words, the 315,360 euros. We are referring to the Municipal Capital Gains Tax, Personal Income Tax and even mortgage cancellation costs if applicable.
Remember that you can use our Municipal Capital Gains in Moraira calculator to work out what you will have to pay for this tax. Similarly, if you think that the price estimated by the Idealista study is not right for your property, you can make use of our online property valuator. However, you should bear in mind that a professional valuation by a real estate expert is always necessary to obtain a starting price in line with the specific reality of your property.
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Let us imagine that the expenses for the sale of our property in Moraira amount to 3,000 euros. We subtract this amount from the 315,360 euros we are selling our property for, obtaining a final value for our property of 312,360 euros.
- Sales price – expenses = 312,360 euros.
2nd Calculate the purchase price + expenses
In order to do so, we have to take into account the price for which we acquired our property. That is to say, in this case, we would have to add the expenses that we assumed as buyers to the 213,930 euros of the purchase price. We are referring to expenses such as Transfer Tax, VAT, Administration, Notary’s Office, Registry…
These expenses usually amount to around 10% of the total value of the property, so, in our case, they are likely to be around 23,393 euros, which is the amount we will take as a reference for our example. This amount would be added to the 213,930 euros of the purchase price, obtaining a final value for our property of 235,323 euros.
- Purchase price + expenses = 235,323 euros
3rd Apply the return from sale formula
Once we have obtained all the figures that form part of our formula, all that remains is to apply it to our transaction.
Return from sale formula = (312,360 – 213,930)/312,360 x 100 = 31.51%.
By selling our property in Moraira we could achieve a return of 31.51%.
Return from renting in Moraira
Now that we’ve ascertained the return from the sale of a property in Moraira, let’s analyse the return we can obtain by renting it out.
According to the portal Idealista, the average rent in Moraira in May 2022 (the most recent published data) was 11.2 euros per square metre. This means that we could rent our 90m2 property for around 1,008 euros per month.
In order to calculate the return from renting in Moraira, we would have to apply the following formula:
1st Calculate the annual income
To calculate the return from renting a property in Moraira we must start by estimating the annual income we obtain from it. In order to do so, we must multiply the monthly rent by the 12 months of the year.
- Annual income = 1,008 x 12 = 12,096 euros.
2nd Calculate the set expenses
From the annual income, we will have to subtract the set expenses that we have to face on an annual basis as homeowners. We are referring to expenses such as property taxes, home insurance or occasional repairs.
Considering our example, let’s assume that our property’s set expenses amount to 900 euros per year.
- Set expenses = 900 euros.
3rd Real estate investment
The real estate investment in the return formula refers to the total sum we had to spend in order to purchase the property, that is, the purchase price plus all the expenses associated with the transaction (taxes, notary, registry…) We had already calculated this value and it amounted to 235,323 euros.
- Real estate investment = 235,323 euros.
4th Apply the Return from renting formula
Now that we have estimated each of the concepts, all that remains is to apply the return from renting formula to our real estate operation.
Return from renting formula = (12,096 – 900)/235,323 X 100 = 4.75%
By renting our property in Moraira we could obtain a return of 4.75%.
To sell or to rent?
According to the example we have seen in this article, we would obtain a much higher net return by selling our flat in Moraira than if we opted for renting, specifically, a return of 31.51% for selling, compared to a return of 4.75% for renting.
The continuous rise in sales prices that the municipality has experienced over the last few years is what has made buying and selling a more stable and profitable form of investment. However, this does not always have to be the case. Everything will depend on the evolution of both sale and rental prices in the municipality in which our property is located.
On the other hand, we have used average data published by the portal Idealista to prepare this article, however, the net return we can expect from our property depends to a large extent on the real estate professionals we rely on.
A good real estate agency in Moraira can help you to get a higher return on your property thanks to the following:
- A professional price evaluation
- A qualified database of buyers and tenants
- A customised marketing strategy
- A tax and legal department
- Comprehensive handling of paperwork
- Support throughout the process from start to finish
If you have a property in Moraira and you are thinking of obtaining a return on it, either by selling or renting it, you can get in touch with us. As well as drawing up a personalised plan for your transaction, we will assess which option could bring you the greatest financial benefits.
