The 5 Key Questions when

Buying in
Madrid

M A D R ID

TY SE
PROPER

ARCH A

ND

T IO N F O
R E LO C A

R E X PAT

After reading this book, you will be ready to take the right decision and set the
right expectations: budget, properties you can afford, location, and also how to
find your dream home.

www.moving2madrid.com

Whats inside this book?

Introduction

Chapter 1: What are the prices in Madrid?

Chapter 2: What are the best neighborhoods?

Chapter 3: What is the final total cost of buying, all included?

Chapter 4: How much can I expect to negotiate?

12

Chapter 5: How to avoid traps when buying ?

14

Conclusion

16

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Introduction
First steps ?
Do you feel overwhelmed with all the information available, and do not know where
to start ?
I am Pierre Waters, founder of Moving2Madrid, and in this ebook, I will answer the 5
essential questions all readers and clients ask us at the start:

Prices: What are the prices for real estate in Madrid ?
Neighborhoods: What are the best neighborhoods ?

Total Costs: What is the final total cost of buying, all included ?

Negotiation: How much can I expect to negotiate ?

Risks: How to avoid traps when buying ?

I keep it as simple and realistic as possible. If you need more details or have questions along the way, follow the links or just send me an email at email@moving2madrid.com with your questions.

What youll get out of this ebook

5 chapters, each covering the main questions, with direct simple answers, followed
by more detailed explanation so you can also get the complete picture.
Our articles and newsletter also cover similar questions, but this ebook includes

After reading this book, you will be ready to take the right decision and set the right
expectations: budget, properties you can afford, location, and also how to find your
dream home.

www.moving2madrid.com

Chapter 1

What are the prices in Madrid?

The first step of all, before even answering this question, is the less romantic: ensure that
you will have the money to support you dream. Planning and preparation are key to a
successful purchase.
If you need a mortgage, you can either request one from a bank in your country of origin
with branches in Spain, or request a non-resident mortgage to a Spanish bank.
For such a purchase, I recommend you go safe and standard: a 20 to 30% down payment, 30 years, and a housing-to-gross-income ratio of around 25%.

Ok, now back to prices...

The first check is to divide your maximum property price by the number of m2 you need.
If you do not know how many m2 you need, a first guess is 40 m2 + 20m2 per bedroom.
For instance, for a 2 bedroom apartment, 80 m2 is a good start.
You will then get a price per m2. This will allow us to see what kind of neighborhoods you
can afford:
6000 / m2 and above: the sky is your limit. The most exclusive
neighborhoods like Salamanca, newly built apartments in the centre and
penthouses are within your budget.
3500 6000 / m2 : you can afford quality apartments in the centre of
Madrid, in Chamberi, but not the most modern, and it might be harder to
buy in the most exclusive neighborhoods. You can afford new build several
stops from the centre, with terraces for instance.

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3000 / m2 is the average in Madrid Capital, which is the zone where you
have metro stops more or less .
2000 3500 / m2: the only solution in the centre of Madrid is Lavapies
and you will need to search and negotiate very well. You can afford nice
modern apartments a few metro stops from the centro district of Madrid.
1500 2000 / m2: the suburbs of Madrid, with less character but more
modern apartments.
You will need to optimize the budget and prioritize price over other needs.
Which leads us to our next question - where should you buy given these prices ?

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Chapter 2

Where is the best

neighborhood to buy a property
in Madrid?
The question we get most is: Where is the best neighborhood to buy a property in Madrid?
Well, in fact, the exact question I get many times is What are the best neighborhoods in
Madrid ?
The answer is: It depends on your budget
and criteria.
However, I know what foreign buyers
expect, what surprises them, and what
kind of neighborhoods they like to purchase in.

The Most Exclusive

Therefore, we created a first overview and

summary.

Salamanca Luxury, Shopping, History

3-words to describe each neighborhood

Justicia / Almagro - Classy, parisian-like,

designers

links to detailed presentation of each

barrio, with photos and even videos, all
home-made or hand-picked
link to my interactive map of the best
neighborhoods for foreigners

Opera el Madrid de los Austrias - Historic,

authentic, cultural
Las Letras / Cortes Cultural, Historic,
Gastronomy

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This list, along with our interactive map,

will give you an overview of the personality
of all the best neighborhoods in Madrid in
3 words for each neighborhood, with a link
to the detailed article, all of them distributed in 4 groups to make it easier for you to
approach:

The Hip & Trendy

Chueca - Trendy, mixed with traditional

and gay

The Contenders

Malasaa - Hipster, Bars, History

La Latina - Tapas, Historical, Traditional
Sol & Gran Va - The citys meeting point,

Lavapies / Anton Martin For value right

shopping&eating out, entertainment

in the centre Multicultural, Alternative

Chamberi For larger apartments just

north of the centre Authentic, smalltown feeling, practical

The Suburbs

Chamartin For staying closer to your

office north of Madrid Business, Eating
Out, Residential
Moncloa / Arguelles For living the
student lifestyle or to be close to Madrids

North-West, from the closest to the

Northwest gate Students, Party, Green

furthest: Pozuelo, Majadahonda, Boadilla,

Las Rozas

Retiro For larger apartments for

families close to the park: Green, posh,

North-East, from the closest to the

family-focused

furthest: Arturo Soria, La Moraleja

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My conclusion is that most opportunities are found not by betting on some neighborhoods, but on exhausting all options within your selection of these top neighborhoods, and
keeping an open mind of frontier zones, where mainstream buyers would not go, and
finally we find a great opportunity after negotiating.
Because indeed, its only after negotiating and optimizing all costs that you are sure to
get the return you were expecting ...

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Chapter 3

What is the final total cost of

buying, all included?
The total cost of buying a property in Madrid is the purchase cost of the property + 10 %.
This is all included, a conservative average based on years of purchasing properties for
foreign buyers.
What is the final cost of buying an apartment for sale in Madrid? How much money
will you need to complete the purchase of
this apartment? Did you include commissions, legal and administrative fees as well
as taxes ?
As a relocation entrepreneur working on
the buyers side, I will give you the facts
simply and clearly:

The total cost of

buying a property
in Madrid is the
purchase cost of
the property + 10%.

Add minimum 7-10 % on top of the purchase price.

There are 2 kinds of costs when buying an apartment in Madrid:
1.

Taxes for the purchase

2.

Legal and administrative fees

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6 % for second hand apartment in Madrid,

around 10 % in total for a new build apartment.

1
Taxes
610%

This is mainly for VAT: 10 % for new build,

or ITP, its equivalent for second hand, 6% in

Madrid only, the lowest in Spain (7 to 11% in other regions such as Valencia or Barcelona)
starting in 2014.
Then there is a stamp tax (IAJD, Impuestos de Actos Juridicos Documentados) to cover
the legal work to be done by the local government for the apartment registry: between
0,3 to 0,7 %. If you want more of a specific estimate for your case, ask for your free consultation.
Because indeed, its only after negotiating and optimizing all costs that you are sure to
get the return you were expecting ...

This covers the work to be done by (decreasing order of budget spent):

the gestora, or accounting and
administrative office: 1000 2000

2
Legal and Administrative
2000 to 4500

the notary: 800 1500

the lawyer: 200 800 (not mandatory but very strongly recommended).
the surveyor: 300 500 (optional, usually requested by your bank).
In a nutshell, the tasks they have to complete are:

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obtaining you the NIE quickly, required Spanish identification to be the owner of an
apartment in Madrid.
checking the legal background and eventually estimating the real value of the
apartment for sale.
reviewing the offer and sales contract for the sale of the apartment
conducting the legal and administrative procedures to officialize the purchase of the
apartment.

Finally, with all these costs, there are many margins of improvement, to optimize on each
item, which is what we do for our clients.
But really, how much can we gain from negotiation - the elephant in the room ?

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Chapter 4

How much can I expect to

negotiate?
Madrid is full of distressed sellers ready to listen to whatever offer

Wrong...
Its in fact one of the key preconceived ideas about Madrid real estate market.
Another one is:
Finding a good property is easy, and they will receive me with open arms.

Wrong again...
Why ? Because you want the best in the category you are interested in. You have good
taste, have experience and know you can get the best of the market.
And right now, the best of the market, this top 10%, even in the crisis, has demand.
Can you get an apartment for a fraction of its price ?
Obviously, the market has now changed from a sellers market to a buyers market. You
have the power.
But not the power to buy anything at a -70% price.
However, the stories on the news are always the most dramatic, and should not be taken
as an example of the entire market.
The center of Madrid is still a prime location with economic growth: 2011 was a growth
year still for Madrid, and May 2012 was the best year ever for tourism, with the largest

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number of visitors ever seen. As realtors say, Location, location and location.
So if you go for modern apartments in the most attractive neighborhoods of the centre of
Madrid, do not expect any big discount. Expect quality properties with great environment,
shops and entertainment around it, and buyers fighting to get the best priced properties.
Expect to find a quality property you like at a price never seen since 2004 and work to get an
even better price.
The average negotiation discount is slightly under 20% on the overall market.
What we are seeing for the properties that are the best in their category, with the right price,
the ones foreigners want to buy: the average negotiation discount is 10%.

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Chapter 5

How do I avoid traps when

buying?
Imagine this situation: you are in the middle of the negotiation, and you see by its dynamic that we are going to get a good deal most likely, we should start our due diligence.
Whats our objective ? To make sure there isnt anything undermining the value of the
property. There are two kinds of risks :
1.

Is the property safe at a legal level ?

2.

Is the property safe at an architectural level ?

In both cases, we recommend to get an expert (an architect and a lawyer) to produce an
analysis certifying with their professional insurance that the property is safe.
For the lawyer, this means you ask to request the basic due diligence, but not any investigation. The lawyer will do the basic checks with the seller, with the registry, catastro and
checking debts.

As for the architect, he will check these papers, and check permits and licenses if needed, the official structural audit (ITE), and then view the property for potential defects.
If anything comes up, then it will give us leverage for the negotiation. However, it also
shows our interest. It has to be introduced in the right way.
The seller has to be warned then that we will complete the due diligence, and that if any
defect appears, which decreases the value of the asset, there will be more negotiation or
a retention until it is solved.

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When organizing the signing, there are lots of details, and all you need to know is the
following:
Has the lawyer certified the purchase ?
Has the architect certified the property ?
Has the notary reviewed everything beforehand ?

The closing part is financial and legal.

On the financial side, you need to go to your bank to confirm the final details of your
mortgage.
With your contrato de arras (pre-agreement), the bank will then issue the final papers
and make the routine checks on their side.
Once the bank has given you the final signed agreement for the mortgage, you can then
proceed to sign the final sale contract, or contrato de compra venta.
Again, get the lawyer you have from the start to check the contract and all legal aspects
linked to the property.
This final sale agreement will be signed in front of a certified Spanish notary (notario).
This will be the moment the transfer of property and money will be completed. So prepare before with your bank well in advance that they will be able to issue a bank-backed
check 48 hours before. Take this very seriously since banks are not always well managed, and this can postpone the sale.
After this contract is signed in front of the notary, you should go directly to register officially the sales agreement at the Spanish Registry. Your bank will be behind you anyway
to make sure you do this step, since legally the contract is not valid in court until registered.

The apartment is now yours...

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Conclusion
How to get the most out of your move to Madrid?
With our budget, we want to get the best property, which can mean different things:
Our favorite based on our personal taste.
The property with the highest rental return.
The property with the safest rental return.
The property with the most flexibility to rent short-term and use for personal reasons.
the property with highest potential for capital appreciation.

And in the end, asking the right question is the first step to giving the right answer. My
experience tells me that the way to get the most out of the property, is to optimize each
step and expertise linked to buying:
search professionally, leveraging local network and exhausting the sources,
view methodically, to identify value where most dont.
evaluate location at a micro level, down to the block, not based on neighborhood,
know what the mainstream market wants and go for what has value and the classic
basic buyers dont want.
negotiate with a sound financial valuation as foundation, professional negotiation
training and a deep understanding of Madrid sellers idiosyncrasies.
refurbish with creativity and an attention to details most local providers dont have,
rent out with no preconceived idea, and every time test and measure to optimize.

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Yes, in the end, there is no magic bullet.

However, there are key questions you have to ask, and a method you have to follow to
get the most out of your move here.
My team and myself will be delighted to discuss in detail, answer your specific doubts,
by any of the following means:
1.
Send us your questions directly at email@moving2madrid,
so you can reach the entire team and get the most relevant expert to
answer.
2.
Send me directly a question via twitter @pierrewaters if you
have a personal comment or feedback on this ebook or its content.
3.
Call us directly at +34 911 980 685 and we will answer your
questions right away.
4.
Book a free 1-on-1 consultation with our Buying Expert Arash, by
choosing the most convenient time and day for you on this page: http://
www.meetme.so/arashmoving2madrid.
Thank you for reading, and we are looking forward to answering live your questions !
All the best,
Pierre-Alban Waters & the Moving2Madrid team

MADRID PROPERTY SEARCH AND RELOCATION FOR EXPATS

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