Profitability starts when the difference in price before and after renovation exceeds 25%, in Salamanca it is only 15%, so the margin is low.
Before the economic crisis over ten years ago, when the real estate market was one of the main engines of the Spanish economy, buying an apartment in Salamanca for renovation and subsequent sale was a common practice and, in many cases, even very good business.
However, due to the passage of time and the development of property prices in Salamanca, it becomes more difficult to make money from this type of operation. Prices for new property in Salamanca are the highest in Castile and Leon, and a few years ago it was worth buying second-hand apartments in order to renovate them and then sell them out. The price difference was very large, and the margin allowed to invest in renovating the apartment.
But the evolution of prices shows that the gap between the prices of new and secondary property has narrowed, mainly because less property is being built and the demand for secondary real estate is greater, which pushed prices up.
While the pandemic we have experienced in recent months may have affected the prices of the property market in Salamanca, the truth is that currently the price of an apartment, which is not in optimal condition and needs renovation, is on average 15% lower than the price of a similar apartment in good condition, according to a study published by the real estate portal Idealista. This 15% is a very small percentage, the seventh largest in the entire country, where the average is 25%, so the difference between the price of an apartment in need of renovation and the approximate price of real estate is not large enough to risk, as the cost of renovation leaves almost no profit.
The numbers speak for themselves. At the national level, the savings that the buyer of the property to be renovated would receive from a typical 90-meter apartment would amount to € 38,395, which could be used to pay for the renovation.
In Salamanca, according to a study by a real estate portal, the difference in price for a standard 90-meter apartment is only 15%, so the amount available for renovation will amount to 26,897 euros, which is almost 12,000 less than the national average, therefore the probability of getting interesting income is much lower.