Denise Guest and Anita Gackowska, friends for more than 25 years, invested in the Lecrin Valley and the Guejar Sierra in Spain, and stand to make £250,000. The properties range from extensive renovation projects to ski apartments bought off-plan. Denise tells us why their development worked.
Why did you choose this location?
Guejar Sierra, where we bought the ski apartments, is a very beautiful small town, perfectly situated between Granada and the ski resort, but still only 45 minutes from the Costa Tropical. The area is just beginning to take off and there is a new road link being built up the mountain, which will bring the ski resort even closer. We feel that there is good growth potential in these properties over the next few years. In the meantime, they have year-round appeal to the holiday rental market, both as summer and winter lets. Also, when we chose the area Granada airport had just opened up to direct cheap flights from the UK and a new coastal motorway was being built, which brought Malaga airport within 55 minutes. The properties had already risen substantially in value before we took final possession of them.
Did buying a mixed portfolio make you feel you were spreading your risk?
We bought the renovation projects in the Lecrin Valley first. The village houses were much cheaper than the off-plan apartments, but were an entirely different proposition. The costas already seemed overpriced and overdeveloped and people were beginning to look for something different. We did our research carefully to find a suitable area we felt had plenty of growth potential. We are now looking to spread our risk by diversifying into other countries.
Off-plan or renovation – what’s easier?
It’s a no-brainer really. Off-plan requires a lot less effort after the initial research period. However, it’s important to ensure that you pick not only the right type of development, in the right sort of area, but also choose the developer carefully. It’s also important not to underestimate the amount of time it all takes.
Even with the off-plan properties, you may want to make changes to the original plan and will need to make regular check-ups of the quality of the build. In terms of a renovation, it’s undeniably better to be on site. You have to be a stickler for detail, fascinated by planning and design issues and more than slightly obsessive.
How did you manage the restoration?
We didn’t employ a property manager. I did two intensive crash courses to improve my Spanish so that I could communicate with the architect who didn’t speak English – I recall Anita doing a lot of visual explanation by drawing on the walls during our early discussions. We chose a locally based Spanish building firm, run by the builder’s wife, who did speak English. At the end of the day, communication is important. There are companies that offer a bespoke building management service, but we couldn’t have afforded it even if we had wanted to do things that way.
You stand to make a £250K profit, was it all worth it?
No one should underestimate the amount of hard work involved. It’s not an easy way to make money. But we’ve been fortunate in that it’s been a great partnership and, yes, at the end of the day it has proved a good investment. I’m sure we’ll do it again. We won’t be able to resist.
What lessons have you learned?
The main requirements are excellent research, hard work and a sense of humour. Be prepared for the unexpected. You won’t be able to anticipate everything, no matter how well you plan. Even if your builder swears in blood to keep to his estimated finish date, be mentally prepared for things to take at least six months longer. If you are financing the project with the help of a Spanish mortgage, make sure you shop around; small banks often give better deals than the big ones. And ensure that your builder’s actual schedule corresponds to the schedule of works in the mortgage agreement – the release of payments is often triggered by the completion of certain jobs in a certain order.
Sarah’s verdict
"I think Denise and Anita did very well because they spread their risk quite thinly across a number of properties and, because they had their fingers in lots of different pies, they’ve got a good chance of some of them doing well. I know it was a lot of money for them, but in the grand scheme of things, they weren’t crippling themselves financially. It was a calculated gamble. In terms of the market they were appealing to, it’s relatively established and unlikely to go away.
Also, the Spanish are fairly happy about their villages being restored by foreigners. There’s a good cultural mix in Spain and they’re used to it – they tend to prefer to construct new buildings out of town – so if people want to come and restore their old buildings, then that’s fine.
Their cleverest move was to buy those renovations in a village that was about to have new roads put in, so they’ve now got good access to the airports. The ski apartments – which are a fashionable buy now anyway – were a good idea, too. Ski resorts are no longer playgrounds of the rich as everyone seems to ski these days. So there is clearly more demand for chalets.
Spain has peaked, a bit like France and Tuscany, but it’s like saying the market has peaked in England or London – there are still dodgy parts of London that will go up in value. Investing in Spain isn’t too risky as it’s a safe market. The returns aren’t as big as other destinations, so it’s not a licence to print money, but, if they sell, they’ve made very good money."
Denise and Anita’s properties are currently available as holiday rentals. For further info, visit www.spanishholidaycottages.com. Find out more about this programme here.
