How to invest in real estate in Portugal

How to invest in real estate in Portugal

Investing in Real Estate can offer multiple benefits, including long-term stability, steady income from rental or appreciation, tax benefits, a hedge against inflation, tangibility, leverage opportunities, and diversification of an investment portfolio.

With the potential of steady cash flow and potential for price appreciation, Real Estate can be considered a relatively safe and secure investment, which can provide long-term financial benefits and stability to the investor.

Below we list the most important steps to take into account when investing in real estate.

1. Research the market

Before making any investment, it’s important to research the real estate market in Portugal. Look at the prices of different properties, the areas with the most potential for growth, and the types of properties that are most in demand.

Here are some specific market research ideas for real estate investing.

Look at market trends

Research historical data on property prices and trends in the area where you plan to invest. Look at data on average prices, median prices, and the number of transactions.

Study the local economy

The local economy can have a big impact on the real estate market. Look at the employment rate, median income, and population growth in the area.

Check local zoning laws and regulations

Zoning laws and regulations can affect what type of properties can be built in an area and how they can be used. Look at the zoning laws for the area you’re interested in investing in.

Visit the area in person

It’s important to visit the area in person to get a feel for the local market. Take a walk around and see what types of properties are available and how they’re priced.

Talk to local real estate agents

Local real estate agents are a great resource for understanding the market. They will be able to provide you with information on prices, trends, and other important details.

Use online tools

There are many online tools available for researching real estate markets.

Research about the property you are about to invest in

Make sure the property you are about to invest in has no major issues or problems, check if the property has any outstanding debts or mortgages and look at the property’s legal history.

A local lawyer could be helpful to check the property, especially if it is not a brand new one.

2. Find a reputable real estate agent

A good real estate agent will be able to guide you through the process of buying property in Portugal, from finding the right property to negotiating the price and closing the deal.

Talk to us, we are one of them!

How to know which are the best real estate companies in Portugal?

Short answer: you’re looking at it!

If you are investing your precious time reading this article on a subject that is so important to you, it is because you have found a high-value real estate agency, with high quality parameters in all aspects.

We pay great attention to detail and accompany our clients at all stages of the investment process.

In any case, if you want to waste more time looking for other real estate agents, pay attention to the following:

Check for licenses and certifications.

Look for real estate companies that have licenses and certifications from the relevant governing bodies in Portugal. This will ensure that they have met certain standards and are operating legally.

Look at customer reviews.

Look for customer reviews of real estate companies in Portugal. Reviews can provide valuable insight into the experiences of others and help you identify the best companies.

Look for companies with a good reputation

Look for real estate companies with a good reputation in the industry. You can ask around or check local media to see what real estate companies are known for their reputation.

Look for companies with a good track record.

Look for companies that have a good track record of successful transactions and satisfied customers. They are more likely to deliver results.

Look for companies with experienced agents.

Look for companies with experienced agents who have a good understanding of the local market and the real estate process. These agents will be more likely to guide you in the right direction.

Look for companies that are affiliated with professional organizations.

Look for companies that are affiliated with professional organizations like the National Association of Realtors. These organizations have high standards for their members, ensuring that you work with a professional and reputable company.

Check online.

Check online directories and real estate websites to find the best companies in Portugal. These platforms usually have a list of agents or companies that are the most active in the market, with many transactions and high ratings.

3. Get a mortgage

If you need financing to buy a property in Portugal, you’ll need to get a mortgage from a local bank. Be sure to shop around for the best rates and terms.

Below is a small suggestion of three Portuguese banks with a high reputation in the market.

  1. Banco Santander Totta: This is the largest private bank in Portugal, with a wide range of banking services, including personal and business banking, investment banking, and insurance.
  2. Caixa Geral de Depósitos: This is the largest public bank in Portugal, and it is also the oldest bank in Portugal. It offers a wide range of financial services, including personal and business banking, investment banking, and insurance.
  3. Millennium bcp: It’s also a private bank in Portugal that offers a wide range of banking services, including personal and business banking, investment banking, and insurance. It’s the second largest bank by assets.

These banks are well-established and have a strong reputation in the Portuguese market. They have a large network of branches and ATMs, making it easy to access their services. It’s important to note that all three banks offer banking services in English, for the convenience of international customers.

4. Understand the legal requirements

Portugal has specific laws and regulations related to buying and owning property, so it’s important to understand these before making an investment.

Legal requirements for buying and selling a property in Portugal

Obtaining a NIF number

As a foreign buyer, you will need to obtain a NIF number (Portuguese tax number) from the Portuguese Tax Authorities, before you can purchase property in Portugal.

Notary and property registry fees

When purchasing a property in Portugal, you will need to pay notary and property registry fees. These fees will vary depending on the value of the property and the type of transaction.

Property taxes

As a property owner in Portugal, you will be required to pay property taxes called IMI. These taxes are based on the value of the property and are paid annually.

Capital gains tax

If you sell a property in Portugal, you will be required to pay capital gains tax. The tax rate will vary depending on how long you have owned the property and your tax residency status.

Legal representation

A non EU resident must have a legal representative in the buying process, especially if you’re not fluent in Portuguese, to ensure that all legal documents are translated and you understand all the terms and conditions of the sale.

Due Diligence

Before buying a property, it is necessary to conduct a due diligence process. This involves checking the property’s legal history, outstanding debts or mortgages, and any pending legal issues that may affect its ownership.

Property inspection

It’s recommended to inspect the property thoroughly before buying it, to ensure that there are no major issues or problems that would affect the value of the property.

5. Consider property management

If you plan to rent out your property, you’ll need to consider property management. This will include finding tenants, collecting rent, and handling repairs and maintenance.

How property management works in Portugal

Finding tenants

A property management company will help you find tenants for your property. This includes advertising the property, showing it to prospective tenants, and completing background checks on potential tenants.

Collecting rent

A property management company will collect rent on your behalf, and will handle any issues that may arise with tenants regarding rent payments.

Handling repairs and maintenance

A property management company will handle any repairs or maintenance that need to be done on the property. This includes scheduling repairs, coordinating with contractors, and ensuring that all repairs are done in a timely and cost-effective manner.

Legal compliance

A property management company will ensure that your property is in compliance with all local laws and regulations. This includes ensuring that your property is up to code, and that all necessary permits are in place.

Inspections

A property management company will also schedule regular inspections of your property to ensure that it is being well-maintained and that there are no issues that need to be addressed.

Tenant eviction

In case of non-compliance with the rental agreement, a property management company will handle the process of eviction in accordance with the laws and regulations in Portugal.

Administrative tasks

Property management companies will handle all the administrative tasks related to managing a property, such as maintaining records, preparing financial statements, and filing taxes.

Communication

Communication between the property owner, tenant, and the property management company will be crucial. They will be the primary contact point and will relay any important information to the property owner, making the process more convenient for both parties.

6. Be patient

Investing in real estate takes time, so be prepared to be patient and not rush into any decisions. Building a portfolio of properties in Portugal takes time but with the right strategy, it can be a great long-term investment.

7. Talk to us

This is last, but if you’ve read this far, you’ll have figured out that when it comes time to talk to a realtor, we’re the obvious choice.

Let us know when you feel ready to move forward with your real estate investment and you will immediately realize that you have just made the best decision.

Good investments and see you soon!

For more details, you can download our property guide.

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