On Wednesday I signed for my new condo at the notary, here in Santiago de Compostela, Spain. My friend Iria went with me to translate and it went rather smoothly. My real estate portfolio now has a condo in Portland, Oregon, REIT’s, and a condo in Spain.
Purchasing a Condo in Spain
Most of the problems I had with the purchase of this property came from my own hesitations. Riddled with doubts and fears, I kept yo-yoing back and forth. Pay cash? Get a mortgage? Get a personal loan? Fuck it, just rent?
Life’s more exciting when you create a bit of chaos and put out some fires. Buying this condo was the perfect chaos in my life and it’s made me realize that I’m too much of a control freak. In the end, everything works out … then you die. And possibly reincarnate as a nematode.
I first viewed this condo end of April. It was the 2nd place I looked at and it was a sale by owner, which is common in Spain. I liked it and placed an offer on 4/29/2019, with a €2,000 deposit.
We agreed on 150 days for me to come up with the money to pay for the condo. Though we both hoped to close much sooner. I was hoping to land a mortgage so that I wouldn’t have to cash out my investments, but that ended up not working out.
On 7/24/2019 we met at the notary, me, my friend Iria, and Esther, the owner. We signed and I got the keys.
Cashing out my Investments
I am not frugal by nature, which I’ve said many times. Saving and investing and thinking through finances is like brushing my teeth twice a day – gotta do it but I sort of dread it. Since 2012 I’ve been a frugal little hamster, stashing away my earnings and being a financially responsible. At some point you gotta stop and admit that enough is enough.
The problem is that you can really get inside your own head. You lose touch with the real world – I wanna live this life and not perpetually prep for it. I never wanted to become like that. So right before I was going to cancel the purchase and call the whole thing off, I decided to chat with my friend Marta.
Her advice was simple:
You’re not buying a fucking boat dude! Relax, you’re trading one kind of investment for another. Unless you think that the condo will have no value in the future, you’re fine, go ahead with the purchase.
With that, I cashed out about $80.000 of my investments and took out a $30,000 personal loan. In total I will need to pay about $125,000 for this condo.
I sold my bond fund (VMLTX), some of my emerging market funds (VEMAX), and some of my total international stock fund (VTIAX). All of these had appreciated but not as much as my other funds. In order to minimize tax consequences, I dipped into these first.
Price of the Condo
The condo was €95,000 but we agreed on €90,000. She would also leave her bed (minus mattress) and the convertible sofa.
She was nice enough to leave me some plates and a towel since I’ve been bouncing around Airbnb’s with nothing than a backpack. I love you Esther!
The conversion rates are decent right now: €1 = $1.12. And though the Euro is stronger than the US Dollar, it used to be $1.18 just a few months ago. Cost of living is also greatly lower which is why you can’t just look at the exchange rates.
But, In order to move money between my accounts from the US to Spain, I have to pay some transactions costs. Not only that, my bank doesn’t offer me marke exchange rates – they offer me their own rate: $1.16.
And though I’ll be paying back the loan quickly, there will be some interest fees which I’ll be saddled with. Maybe in a few months I’ll be able to calculate the exact cost of this condo.
Condo Purchase in Spain, The Steps:
1st. Sign an intent to buy with the buyer. You don’t need a lawyer for this, though my lawyer recommended that it’s better for her to have done it.
2nd. Hire a lawyer to do a background check on the property. They will uncover any problems and address them (taxes, legal issues, liens).
3rd. Apply for a mortgage or get the cash ready. Make sure to have an extra 15% for fees and taxes on top of the sale price.
4th. Make sure the seller gets an “Energy Certificate” which is easy to do.
5th. Contract a notary and submit all the documents they need and set an appointment to go there and sign. Ask around, see which place people recommend.
Moving in was a bit anticlimactic. I’ve bought and sold several condos, so I’m over the hype of it. But I really enjoyed my first day in the condo. All I had to take with me were 2 bags and an umbrella. Fortunately I haven’t accumulated too much shit these past 5 months living in Spain.
I don’t have a mattress but the sofa is a fancy pull-out Italian sofa – it was one of the most comfortable beds I’ve slept on. I will be browsing Wallapop for some second-hand basics.
Everything seems to be functional in the condo. Though at first I thought the water heater was dead. I texted Esther and she told me what to do. I still haven’t used the washer, hopefully that’ll be functional.
She lived there with her partner and 2 young kids, and though she tried to clean the place up, woa, it definitely needs some cleaning. I’ve only slept 2 nights there so it’ll take me a while to go through the whole place.
What’s Left to Do
Okay, it’s not all bunny rabbits and flying doves. At the notary I learned that I needed to register the property and myself with the Ministry of Defense. WTF?
Because I’m not a European citizen, and because of worries about money laundering, some properties have to go through the Ministry of Defense. This can be done before the sale is completed because if the MOD doesn’t accept me, my money and the condo is gone.
So, I will now need go through a very lengthy process of sending documents and signing shit to Madrid. Ugh.
I have to get Wifi for my place. That’s no easy task. It can take several weeks for DSL or Fiber to get hooked up. For now, my hotspot on my phone has been a lifesaver.
I have to transfer the utilities (water and electricity) to my name as well. This can be a very lengthy and tedious process. My lawyer charges €500 because it’s so involved. I’m doing it myself because Esther is going to help me and she’s comfortable having it stay in her name until I get it done.
What I Should Have Done
My friend Niki congratulated and then asked: “Okay, tell me, any buyer’s remorse?” She reminded me that when I bought my Portland condo I had some buyer’s remorse.
I don’t have any buyer’s remorse – yet. But here are a few things I would have done differently. Hopefully this will be good advice for any other digital nomad physician who wants to settle down in Spain.
1. Get a Realtor
If you can find a good realtor, it’s worth it to hire them. You won’t pay much for them, the seller bears the majority of the cost.
The advantage is that a good realtor will help you navigate all the little nuances of buying your first property in Spain. They will tell you what to look out for and might have in-house lawyers to handle the legal issues.
I decided against this because every realty office I researched had horrible reviews. So, either people’s expectations are unrealistic or realtors are sheisters.
2. Hound Your Lawyer
I’ve had good luck with lawyers in the US. They tend to do the work they promise to do and besides some basic directions, I don’t have to babysit them.
Here, the lawyers are apparently very busy – or scatterbrained. It’s important that you ask 1,001 questions and constantly hound them – it’s expected, and it’s normal.
I paid an upfront €1,500 fee to my lawyer who wasn’t even based in Santiago de Compostela. I couldn’t get anyone from SDC to get back to me, so I had to settle for this lawyer out of Valencia.
In the end, she nearly made us miss the notary deadline and I nearly fired her on 2 occasions. Not in an angry way, it was just taking too long and communicating with her was frustrating.
3. Inspect the Appliances
On thing I didn’t consider doing is to test all of the appliances. Commonly, homes which are sold in Spain don’t come with washers, refrigerators, microwave ovens, nor ranges. People tend to take that shit with them as they move from home to home.
But you can find homes which are fully furnished. Of course, this is built into the price. I didn’t think to test the hot water, the fridge, the range, or the washer. In hindsight, that would have been smart.
It will give you a little more wiggle room in the negotiations. But don’t expect the owner to fix anything. In Spain, most homes are sold as-is.
4. A Home Inspection
I asked my lawyer about this and she made a good point, even if you uncover anything wrong with the place, it’s on your to fix it. But I would argue that it’s good to know what you’re getting into.
I have no idea if you can even find a home inspector in Spain. But if you can, I would recommend it. If there is any problems then at least you’ll know ahead of time.
5. Call the Notary
Your lawyer is there to do the thing you cannot do yourself. But they won’t have enough empathy to really do the leg work. So, I recommend that you ask for proof that they did their work and that you also double check their work.
I should have called the notary myself before showing up. This would have revealed that I needed a seal of approval from the Ministry of Defense.
2 replies on “Condo Purchase in Spain”
Congrats, money well spent Dr. Mo. Why should we obsess about saving money for future when we will have more than enough and with modest living we won’t need much either. I think we are just using saving compulsion as an excuse not to live fulfilling life as otherwise how could doctors justify why they need to work. We are just bunch of workaholics.
Very well said. Maybe it’s better to fill the workaholism need with volunteer work and spend the rest of the time untangling from the income.