PROPERTY Investors in Madrid have begun cashing in on long-term tenants who still pay 1980’s rent rates to grab huge deals on prime location properties.
If you look at any inmobiliaria en Madrid, for prime location apartments in the centre of the city, tenants can pay upwards of €2000 per month.
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However there are still lucky residents of pre-Franco era contracts that pay anywhere between €7 and €700 per month, a bargain in a city that is experiencing soaring rents.
For landlords, these tenants present nothing but headaches, as bound by Spanish laws, the contracts remain in place until the tenant moves out or passes away.
Quick thinking property investors are, however, jumping on these properties as the landlords are wanting to wash their hands of the commitment.
Luis de Ulibarri, an investor in Madrid, recently snapped up eight apartments in central Madrid for €1.8 million, just €225,000 per apartment, a bargain at the current rates.
They come with a catch though, as they all contain tenants that pay less than half the going rate of €1,800 for similar properties.
De Ulibarri is chairman of Real Estate Investment Trust (REIT), a company that has over 48 properties on their books.
REIT calculates the tenants’ life expectancy and if a suitable investment looks likely, they purchase the property and literally ‘wait for the tenant to die’ before relisting the property at the going rate.
“We might have to wait until 2050 in some cases to reap the rewards of our investments, but we’ll suck that up,” explained de Ulibarri.