Magazine

We present our new opportunity on Calle Mayor, Alicante, and explain how we have analyzed it.

As you will see, we are broadening our horizons and researching new markets, and that is why we have found an opportunity in Alicante. It is a province that we have been studying for several months, as we had detected tourist demand. And in which we hoped to find an opportunity that met our quality standards.

After a period of study using our Big Data technology with our own algorithms and working method, we have managed to find this new opportunity, which presents estimated return ratios in line with our criteria.

It is meticulous work, because we only look for properties with an estimated net rental yield close to 5%, that meet all legal requirements, and with potential for appreciation, with no guarantee. But let's analyze the specific opportunity.

1. STUDY OF THE AREA

First, we begin with the study of the area, and we found that zip code 03002 was the one with the highest income, with an average occupancy rate of almost 56%, compared to the rest of the zip codes, as you can see in chart 1. It is a very positive rate, since it is a central location, where we can find representative monuments of Alicante, in addition to being surrounded by restaurants, pharmacies, shops, etc. And of course, it is an area very close to the Mediterranean Sea, and to the leisure and recreation area of the port of Alicante. 

 Chart 1: Brickstarter

In addition, it is the area with the lowest seasonality according to the data analyzed. As we can see in chart 2, this statement is supported by the evolution of the blue-colored graph, which stands out for its average occupancy rate above that of the rest of the zip codes. 

Chart 2: Brickstarter

2. STUDY OF THE PROPERTY TYPE

Second, once the ideal area was identified, we moved on to analyze the type of property best suited to obtain a good rental yield. To do this, we took chart 3 as a reference, where we can see the number of properties in zip code 03002 and their type.

Unlike in Valencia, we see that in Alicante, tourist homes with 2 and 3 bedrooms stand out. This makes them a type of apartment that is heavily used for tourism, with 1,246 properties with 2 bedrooms and 1,083 with 3 bedrooms. With all this, we can see that 1-bedroom properties have greater future potential, with 710 currently in operation, but with an occupancy rate showing a strong upward trend. 

Chart 3: Brickstarter

This future projection can be seen better reflected in chart 4, where we observe that the occupancy rate of 1-bedroom homes has increased in the last year, 2017, compared to the months of previous years. 

Chart 4: Brickstarter

With all this data provided by our own algorithm and a meticulous market study, which we have summarized above, we identified the opportunity on Calle Mayor, Alicante. It thus becomes an investment opportunity that meets our criteria, for the reasons we set out below, without this guaranteeing any result.

3. CHARACTERISTICS OF THE OPPORTUNITY

• First, it is a property that is already in operation as a tourist apartment, with estimated annual revenue of €18,000, not guaranteed, in line with our forecasts for that type of property.
• It is a small home, with one bedroom and one bathroom, with capacity for 4 guests.  Contrary to what happens in Valencia city, it is the type of property with the greatest potential, since large apartments predominate in Alicante. The apartment is very bright, with two spacious balconies that overlook Calle Mayor itself, and has an elevator and air conditioning. In addition, it is a practically new property, since its construction was completed in 2012.

• The final price of the transaction (including expenses, furniture, taxes, etc.) amounts to €154,466. Estimated net rental yield: 5.5%. Estimated IRR of the transaction: above 9%. These are estimates and are not guaranteed.
• It is a home that already has a tourist license. In addition, it is located in a building fully dedicated to vacation rentals, which reduces, without eliminating, the legal uncertainty. The Alicante City Council has, for the time being, placed no known obstacles on tourist apartments, although the regulations may change.
• The property is located on Calle Mayor, one of the main arteries of the Old Town of the city, in the Barrio Santacruz. Full of restaurants, bars, and entertainment venues. A few meters from the seafront promenade, the port, the City Hall, the Co-Cathedral and the Postiguet beach. It is the area with lower seasonality, and higher daily income for all property types, within the City of Alicante.

• The planned sale (exit) price is €180,000, an amount that, according to our estimates, is affordable for a large number of investors, which could make it easier to sell; this is not guaranteed.

Despite being located in Alicante, management will be handled by Brickstarter. We will continue to set the rates, booking policies, and communication with guests, while the current manager will take care of maintenance and cleaning.

After analyzing all this data, at Brickstarter we have decided to propose the apartment on Calle Mayor, Alicante as an investment opportunity. You can view its property page, with its full information and its risks. 

Past or estimated returns do not guarantee future returns. Investing involves a risk of total or partial loss of the invested capital.