Despite the ongoing challenges in the rental market, Spain is witnessing a new surge in housing investment. This surge is exacerbated by the recent Housing Law. For those seeking secure returns through property this new wave of investment is proving highly attractive. El Economista speaks of the growing popularity of a new investment model known as “triple rental.”
The traditional approach to upgrading homes has often been to sell one’s current property to purchase a larger one. However, the financial and tax burdens associated with this method have made it less appealing. Enter the “triple rental” formula—a novel investment strategy gaining traction in Spain.
Triple rental explained
As explained by Jesús Martí, director of large accounts at Alquiler Seguro, triple rental involves three key operations. “First, you rent a property that meets your current living needs, becoming a tenant. Second, you lease out your existing home. Finally, with the money saved from not purchasing a larger home and covering related expenses, you use that capital to buy a third, more affordable property as an investment. Preferably, this property is located outside your city and you rent it out and generate income without depleting your assets.” This model allows individuals to invest in rental property without sacrificing financial liquidity.
Triple rental, an example
A couple in Madrid is expecting a child and in need of a larger home. Instead of purchasing a new property for €525,000, which would cost an additional €65,000 for renovations, they decide to rent a similarly sized flat for €1,600 per month. They then rent out their current home for €1,200 per month, effectively paying €400 for their larger living space.
The savings from not buying a new home are then used to purchase a smaller, more affordable property in Oviedo for €88,400. This new investment property is rented out for €560 per month, which helps offset their rental costs in Madrid. As a result, the couple can live in a larger home while owning two properties—one for investment—without stretching their finances.
Is now a good time to buy?
According to industry experts, this is an opportune moment to invest in real estate. Maria Matos, director of research at Fotocasa, points out that the European Central Bank’s recent interest rate cuts have created a favourable climate for property investment. “We’re seeing a significant increase in buyers entering the market, and the percentage of investors has nearly doubled, rising from 7% to 13% in the past year. Real estate is viewed as a safe and resilient asset, making it an attractive option for long-term wealth creation.”
Despite the limited supply of housing, Matos notes that this shortage has its upsides, as high demand for rental properties is driving rental yields. Nationally, the average return on investment for rental properties is around 6.4%. However, certain areas offer even higher returns, particularly where property prices have remained stable while rental rates have surged.
Emerging trends in property investment
The triple rental model is not the only trend reshaping Spain’s property market. Sergio Cardona, an analyst at the Observatorio del Alquiler, highlights the growing popularity of shared investment strategies. Instead of purchasing a whole property, investors are increasingly pooling resources to co-invest in higher-value properties, avoiding the challenges of managing rentals themselves.
“Investors are no longer just buying properties near their homes to minimise risk; they are broadening their horizons,” explains Cardona. “By sharing the investment and outsourcing property management, individuals can enjoy the financial benefits of rental income and capital appreciation without the hands-on burden.”
Also read: Record new build house prices in Spain