Have you ever thought about investing in property but been put off by the high upfront cost? Garage spaces auctioned in the BOE (Spain's Official State Gazette) could be your gateway into the world of property investment. At Subastic, we have put together this guide to help you find your way through the process and make the most of this opportunity.
The hidden appeal of garage spaces
Given heavy traffic, the shortage of parking spaces and the stress of driving round and round looking for somewhere to park, more and more people are looking to rent a garage space, which makes investing in garage spaces a very attractive option for several reasons:
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Affordable initial investment: Garage spaces cost less than other assets such as flats or commercial premises, so the capital needed for this investment is within reach of more pockets.
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Potential returns: In high-demand areas, the yield can exceed 6% a year.
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Relatively simple management: Unlike a rented flat, where you may come across difficult tenants or costly repairs, garage spaces are usually much easier to manage.
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Easy to assess: With a bit of practice, you can get a fairly accurate idea of the condition and potential of a garage space with a simple visit.
Finding your way around the world of auctions
That said, it's not all that simple. Auctions have their own rules and peculiarities, and it is essential to understand them properly before taking the plunge. There are mainly two types of auction where you can find garage spaces:
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Enforcement proceedings (vía de apremio): This is the most common procedure, usually the result of unpaid taxes or debts owed to the authorities.
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Insolvency proceedings (concurso de acreedores): This happens when a company or an individual is declared insolvent.
In this article, we are going to focus on insolvency proceedings auctions, which have some interesting peculiarities.
Insolvency proceedings auctions
In insolvency proceedings auctions:
- The insolvency administrator and the Commercial Court set the rules of the proceedings.
- A specific liquidation plan applies or, failing that, the general rules of the Insolvency Act (Ley Concursal).
- Auctions can be held through the BOE or through specialist companies.
It is essential to understand these rules, as they will govern the whole auction process.
Steps to take part
Taking part in an auction may seem intimidating at first, but once you know the steps, you will see it isn't that complicated. Here is the sequence we usually follow:
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Prior research: This is crucial. We thoroughly analyse the auction notice and the possible charges on the property. We have learnt the hard way that skipping this step can be very costly.
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Deposit: Generally, you have to lodge 5% of the value as a deposit. It is the price of entry to the auction.
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Bidding: Bids are placed on the BOE Auction Portal, bidding the amount you have estimated. Here we explain in detail how to bid.
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Award: If you win, you will have to pay the balance within 40 days. It seems like a long time, but it flies by when you are arranging the financing.
The unwritten rules of the award
Although there are official rules, over time we have discovered some "unwritten rules" that can make a difference:
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If the best bid exceeds 70% of the starting value, the sale is approved almost automatically.
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Between 50% and 70%, the enforcing creditor has preferential options. This is where interesting situations sometimes arise.
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Below 50%, the court clerk (Letrado de la Administración de Justicia) has the final say. There have been some surprising cases in this scenario.
Recommendations for investors
Based on our experience at Subastic, we offer the following recommendations to investors interested in garage space auctions:
- Physical check: Verify that the garage space actually exists and matches the details in the Land Registry.
- Possession status: Find out whether the space is occupied and what procedures are needed to take actual possession.
- Financial analysis: Carry out a realistic assessment of the potential return, taking all associated costs into account.
- Legal advice: Consult a lawyer specialising in auctions to clear up any questions and avoid legal problems.
- Prudent investing: Avoid bidding if there are significant doubts about the viability or profitability of the investment.
Final thoughts
Garage spaces at BOE auctions are an attractive investment opportunity, especially for those starting out in the property market. Although they require careful study and a well-planned strategy, they can offer a good return with relatively controlled risk. At Subastic, we are dedicated to providing the information and support investors need to make informed decisions in the world of property auctions. Our aim is to make the process easier and help our customers identify the best investment opportunities. If you are considering investing in garage spaces through auctions, we invite you to explore our current auctions. For personalised advice or to answer any questions, please do not hesitate to contact our team of experts. We are here to help you navigate the world of property auctions successfully.
And if you are ready to get started, explore our garage space auctions and discover your next investment opportunity. Or if you would prefer more personalised guidance, get in touch. Our team is here to help you navigate the fascinating world of property auctions.
Good luck and happy bidding!