Walter Finch
BUYERS in Spain’s property market are managing to negotiate up to 30% off when snapping up bank-owned flats.
Leandro Tomeo, a property investment expert and TikTok content creator (@leandrotomeo), has shed light on how investors can access these opportunities, which largely stem from mortgage defaults, bankrupt developers, and even squatted homes.
Most homebuyers search for properties on portals like Idealista or Fotocasa, but investors like Tomeo take a different approach.
Being registered with financial institutions, they receive direct notifications of available bank-owned properties, allowing them to select the best opportunities before they hit the open market.
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Once a property is identified, it undergoes an inspection.
Some properties can be secured at discounts of up to 30% when paying in cash, according to property investor Leandro Tomeo.
Banks and investment funds, keen to offload real estate, are often willing to negotiate lower prices to speed up sales.
However, buyers must also be prepared for bureaucratic hurdles, including signing a Know Your Customer (KYC) document, which verifies the identity of the purchaser—whether an individual or a company.
A reservation deposit of between €1,500 and €3,000 is typically required before the final purchase can proceed, subject to anti-money laundering checks.
Finding good deals is becoming harder as property prices rise, and investors must ensure they buy below market value to guarantee profitability.
Financing is another hurdle, as banks typically offer only 50-70% mortgages for investment properties.
Spain’s high property transaction taxes also add to the costs.
“Buyers need to account for property transfer tax (ITP) and notary fees, which can range from 4% to 10% of the purchase price,” Tomeo explains.
Tomeo advises investors to have a clear target market before purchasing: “Don’t buy unless you know who you’re going to sell or rent to.”
Rental strategies also play a crucial role — mid-term (up to 11 months) and holiday rentals are often more profitable and legally secure than long-term lets due to Spain’s tenant protection laws.
Additionally, investors should factor in renovation costs, hiring reputable construction firms rather than independent tradesmen, and ensuring all work is invoiced to avoid legal and accounting issues.
However, there are bargains to be had as banks are still offloading thousands of properties they acquired after the 2008 financial crisis, when over half a million homes fell into their hands.
Unlike private sellers, financial institutions are often eager to liquidate assets, making negotiations smoother for buyers.
Alongside traditional banks, private equity funds are also looking to cash in on their real estate holdings.
These distressed properties come from various situations, including mortgage defaults and unfinished developments.
Some banks even offer financing options to complete construction projects, positioning themselves as strategic partners for investors.
With Spanish banks still holding significant property portfolios, those who know how to navigate the system could secure lucrative deals—if they can overcome the bureaucratic and financial challenges along the way.
