Investing in a Tenerife resale and making it pay

What should you look out for when investing in a resale property in Tenerife?  First off, what do we mean by 'resale'? It's a word that we don't meet much in the UK, but it simply means a property that is not bought from a new development.

The most important thing to do when looking for a resale property for investment purposes is to throw all emotion out of the window. You are looking for a property that will create rental revenue and accrue capital value, all other considerations are irrelevant. It doesn't matter if your favourite spot is Granadilla, it doesn't matter if you think San Miguel is charming. In fact it doesn't matter what you think at all! What is important is how other people think, specifically people who come here on holiday. And the vast majority of people who come to Tenerife on holiday want certain very defined things, if you try to appeal to a minority, then you will find that you will be renting out your darling little cottage for the minority of the year. And that's not a good investment! So be clear and strict with yourself. You need to appeal to the tourist masses.

Now let's look at what the masses want. It has to be as close as you can afford to the sea, a golf course, or ideally both. Nobody wants to walk too far to the beach, holiday time is too precious. Whereas agents used to advise investors to buy one bedroom flats in the heart of town, trends in tourism are changing. There is a swing towards more upmarket and spacious accommodation with as many luxurious frills as possible. Investors should always take such market trends into account. The property should have a sea view, or at least a view of the pool or golf course. The complex should have as many facilities as possible, such as a bar, a restaurant, kids clubs, sports facilities and a manned reception to welcome your guests.

Remember, flights arrive at all sorts of times. Many complexes have management companies that take care of everything on your behalf. This can be an ideal situation if the amount of time and energy you can dedicate to marketing is limited. But if you can spend the time by placing adverts and booking in the responses and by talking to family, friends and colleagues about it, then you'll find this more cost effective and your return will be better.

Bear in mind the additional costs involved. You will need to pay tax on your rental income and there will be an element of wear and tear that may necessitate periodic redecoration and replacement of furniture. You would be wise to seek the advice of an established estate agent with a property investment specialist. They should identify the best investment property for the amount you choose to invest, in a cold, logical way and discuss your options with you. You should also use them, in conjunction with your accountant, to structure the most tax efficient investment package. For instance, UK taxpayers may be wise to consider using their pension funds to purchase, taking advantage of income and inheritance tax concessions.

If you find a good, professional agent, the level of advice will be invaluable, it could also be free as part of their service. If touristic rental is not for you, then you might consider investing purely for capital growth or the burgeoning long term rental market.