The risky trend in Spain of buying bargain homes with squatters in them

If you spot an unbelievably cheap property in a popular area in Spain, chances are that it may already come with house guests. But for some investors who know what they're doing, buying in occupied homes can work out to be very profitable.

Since the 1980s, Spain has had an issue with squatters, or okupas as they’re called here.

It’s mainly homes that are left empty for a while that are at risk from squatter occupation, but sometimes it happens to homes owners who are away while on holiday or who are renting out their properties to tenants who stop paying the rent, thus becoming squatters.

Okupas also often choose bank or investment fund properties to live in. These are typically located sparsely populated urban areas or the outskirts of big cities.

Because Spanish law tends to protect tenants over landlords, okupas can be very difficult to evict, particularly if they’ve been in the property for more than 48 hours. It often takes lengthy and lengthy legal battles to get them out.

The government recently rolled out a law promising 'express evictions' but in practice many have questioned how effective it actually is.

As a result, owners often prefer to try to sell off these occupied homes rather than having to deal with what can be months or even years of issues in and outside the courts.

What many may find surprising is that there is a growing number of investors who are actively looking to buy these homes with squatters in them.

Idealista website alone lists more than 20,000 properties whose owners acknowledge they have squatters.

The main attraction is that these properties sell for at least 30 to 50 percent under the current market rate. According to Idealista, they can even be as much as 60 percent cheaper.

If you go on a property site, you’re likely to see lots of homes around the same price, but there may be a couple that jump out at you because their offered for such a low amount. While it may not say in the title, if you click on the ad and read the description often it will give you the reason why it’s so discounted – and the reason is often because of okupas.

Some of these homes are also owned by banks who ended up taking them over because owners couldn't pay their mortgages.

Despite the great bargain and rise in popularity of this type of sale, it’s very risky and experts don’t recommend that regular property buyers purchase them. It’s only really for experienced investors who know property flipping in Spain inside out.

"They are experts in the market, they know it very well and they buy for themselves because there is a risk,” Iñaki Unusain, a real estate personal shopper told Spanish newspaper ABC.

What's key also is that these people "know how to choose the right type of squatter" he adds.

For example, they choose squatters who they can negotiate with and don’t touch any properties with inquiokupas.

As we mentioned earlier, inquiokupas are squatters who were once legal tenants in the property, but for one reason or another stopped paying the rent and refused to leave.

"If that's the case, they won't move in. Furthermore, these evictions are suspended until May 2028," Attorney Sandra Aurrecoechea of Marín y Mateo Abogados tells ABC.

The main issue with buying squatted properties is that you can’t get possession of the home straight away and will rarely even get the keys. It will be an uphill legal battle before you yourself can get it.

It also means that you will be buying the property solely from photos and descriptions, you will have no idea what kind of condition the property will be in when you get hold of it.

You may be getting an apartment well below market value but you will also likely be inheriting a lot of debt. This could be debts in property tax and community fees, unpaid electricity and water bills etc. And there are of course the legal fees that come with the territory.

This is also ammunition in terms of negotiating the price even further down when dealing with the owner.

Lawyer Arantxa Goenaga also explains that banks won’t give mortgages for these types of properties so you’ll have to have a lot in personal savings.

A lot of people who decide to embark in these risky investment hire the services of specialised squatter eviction companies.

They're often made up of muscle-bound individuals who know how to 'legally' scare the squatters into leaving.

Having a lawyer who specialised in evictions is also likely to help in such cases.

There's also factoring in the possibility of having to pay off the squatter if that's what it takes to get them to leave, even after the purchase of the property.

If you buy a casa okupa, you'll have to undertake the challenge of starting a long legal process to recover possession of the property before you can start to make changes or renovate it.

Thus it will have to be a long-term plan, don't expect investment in these types of properties to make you a quick investment.

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