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How to Start Property Investing in Europe

Property investing is one of the savviest financial strategies you can employ. If you purchase the right properties, you can see your investment grow significantly over time, and if you charge rent to tenants, you can remain cash flow positive throughout the duration of your ownership.

Real estate is a great addition to any investment portfolio, and can help you establish a secondary stream of income as a business owner as well.

That said, property investing seems intimidating to most newcomers, especially in the European Union. Real estate requires consideration on many variables, and if you're not careful, your investment may cause you to lose money.

Fortunately, property investing in Europe is more approachable than most people think, and even young, inexperienced investors can get involved. Here's everything you need to get started.

High-Level Strategy

First, you should think about your high-level strategy, and to do that effectively, you should consider your long-term goals. What are you hoping to achieve with your property investment strategy? Is your goal to optimize for long-term profit, making as much money as possible over the years? Or are you more interested in setting up a stream of revenue you can tap into immediately?

Most people try to find property in one or more of the following categories:

  • Residential rental property. Basic residential rental property requires you to find one or more tenants, collecting rent from them in excess of your monthly expenses. It's a way to set up a stream of recurring revenue, but it can also be used to take advantage of the long-term growth of a neighborhood.
  • Apartment buildings and complexes. If you like the idea of collecting rent, but individual property management doesn't sound appealing, you might optimize for apartment buildings and other multi-family complexes. These are more common in some countries than others.
  • Commercial property. You may also invest in commercial property, allowing you to attract local businesses as tenants.
  • Property flipping. Property flipping is a short-term strategy in which you buy a property in need of work. You spend time and money fixing up the property and/or making improvements, and you sell it for a profit. It's a potentially lucrative strategy, but it's also a risky one.

You don't have to choose only one approach; instead, you can balance a portfolio with many different types of properties, especially as you grow. However, to start, it's a good idea to limit your focus so you can specialize in one area.

Legal Differences

One of the strengths of the European Union is also its greatest weakness. The EU currently consists of 27 member states, and each one has its own culture, language, laws, and regulations. In one country, you may find a plethora of attractive rental property opportunities, and in another, you may find more attractive commercial property investments. In yet another, properties may be so overpriced there's no room to enter. No matter what you're looking for, chances are good that at least one country can offer it.

However, this also means you'll need to spend significant time researching property investment and landlord laws in each area. For example, what are the requirements to buy a property? What kinds of fees will you have to pay? What are your responsibilities as a landlord? What restrictions will you face when putting together a lease agreement? What rights do your tenants have? What happens if your tenant can no longer pay rent? For most novice investors, the best path forward is to talk to a lawyer to learn more about these specifics.

Getting the Money

To invest in property directly, you'll need to have at least some money. You'll likely be able to get a loan for much of the property's value, and you may also be able to invest in a property with a partner or a company, reducing the burden on you. However, you'll still need enough cash to make a down payment.

The two tactics that can help you do this are reducing your expenses and increasing your income; consider making strict cuts to your budget and picking up a side gig to accumulate your seed funding. Once you start making a stream of revenue with your first property, you'll find it much easier to accumulate the funds necessary for future purchases. That's why saving the money for your first property is such an important stage of the process.

Starting Out

You don't need to have decades of experience to get started with property investing. If you did, nobody would ever start investing. As long as you have an understanding of the fundamentals and enough cash that you're comfortable risking, you can get started.

There's no real substitute for experience, so be prepared to make mistakes as you undertake your first few purchases. Commit to learning from those mistakes, and gradually improving your approach. In the meantime, consider finding another property investor in your target area and learning from them; if they're open to it, you may even treat them as a mentor.

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