Property Bargains And Rental Investment Opportunities In Algarve, Portugal

This Top Coastal Market Is An Absolute Bargain

I’ll be in Portugal in a few weeks for our Live and Invest in Portugal Conference. I’ve booked my ticket to arrive several days early so I can do some shopping. This is a window of opportunity to own in one of the world’s top coastal markets for absolutely bargain prices.

Prices are low for two reasons. First, this market remains down in the wake of its post-2008 collapse. Second, the euro remains weak against the U.S. dollar.

I intend to act. My target is a beachfront rental.

The real estate agent I’m working with has warned me that what I’m looking for—specifically, an apartment in an old stone building in a small town on or near the beach—isn’t easily found. They’ve sent me a half-dozen properties that fit every other criteria on my list but that are all in new apartment complexes.

The experience is reminding me of the search experience my wife and I suffered through when we bought our house in Ireland more than 17 years ago. We gave the real estate agents our criteria; we wanted a big, old, Georgian-style house on some land.

Our first day out, the first agent we worked with took us to see houses he insisted met our criteria, but they were all new-builds, in what the Irish call “estates.” Loads of these estates were being developed at the time, each with 20 to 100 houses. That first agent took us to three different housing estates and showed us, in each, four- and five-bedroom houses. To him, the number of bedrooms qualified the houses as “big.” And, as far as he was concerned, “big” meant the houses fit our description.

My wife refused to get out of the car to tour the final house… which was the same, really, as all the other houses we’d seen. We tried to remain polite as we explained that these houses were fine for what they were, but they were not at all what we were looking for. We wanted big, yes, but, more than that, we wanted old and Georgian. We wanted character.

The agent’s response was that some of the houses we’d seen were old. Some of them had been built more than five years earlier, he assured us.

We expanded our search by meeting with other real estate agents. That’s when we realized that the reason the first agent had shown us the houses he had shown us was because those were the houses his agency had on its books. No multiple listing service was available in Ireland at the time (and still isn’t, though it’s easier today to find a broader range of properties for sale with the help the Internet), and agencies didn’t (and, again, still don’t) cooperate with one another. The only way a buyer could get a real idea of what was available for sale was by meeting with every real estate agent in town.

Needless to say, that’s hardly an efficient strategy. Unfortunately, however, it’s how most of the world’s real estate markets operate.

In Portugal, I’ve found and am working with an agency that does cooperate with other agencies. I’m hoping to be able to get away with less knocking on doors to find what I’m looking for in the Algarve next month. Still, I know I’ll have to do at least some of my own on-the-ground research to find the type of property I’m interested in.

I’ve created a challenge for myself that you can avoid. If you’re in the market for an investment property, with no personal use component to complicate things, you should have an easy time finding good options. This market is easier for the investor-buyer to navigate than many markets thanks to the long expat presence in the area. Most real estate agencies speak English (many are run by British expats), meaning no language barrier, which can be a big hurdle other places.

Your best option if you’re shopping for an investment yield is a one- or two-bedroom apartment. These are plentiful in this well-touristed area. Make your choice based on location and building or property amenities. These are the two most important factors affecting occupancy rate.

You should be able to buy a good rental property for as little as 100,000 euros up to 250,000 euros. I’ve focused on 150,000 to 200,000 euros for my search.

One thing to be aware of is that at least two of the biggest agencies I’ve spoken with want to work only with people looking to spend 500,000 euros or more. This despite the fact that these agencies advertise lower-priced properties on their websites. Those bargain listings are lures to get you into the office.

I’ll have more from the road and details on specific opportunities and current listings for my Marketwatch members.

We’ll be covering Portugal as part of our Retire Overseas Conference in Orlando in September. Whether you’re interested in good investment returns or a coastal lifestyle, Portugal, specifically the Algarve, should be on your radar.

Lief Simon

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