Those who seek to buy property with a letting capability must first decide which of two categories they belong to:

• Category ‘A’ are those who buy a property primarily for their own use, be it as a holiday home or as an eventual retirement home, and who wish to let the property when not in use in order to provide revenue to pay for the running costs.

• Category ‘B’ are those who purchase a property – or maybe even several properties – strictly as a financial investment.

People often have very mixed objectives, and it is one of the first jobs of an overseas estate agent to help the client clearly define his or her objective, and to show the considerable differences in properties designed to suit either Category ‘A’ or Category ‘B’, as follows:

Location - For letting, the property’s location should be easy to express in advertising and have a strong appeal to a certain type of holiday-maker. Obvious locations are on or near a golf course, close to a beach, convenient for a ski resort, and so on. For personal use or retirement, many people look for a quiet location or a small town, where long-term friendships will develop.

Room size and number of rooms - For holiday letting, the rental income will normally be determined by the number of bedrooms, with little regard to the size of each room. Holiday villas are therefore usually built with small bedrooms and little storage space, which can be impracticable for normal living.

Swimming pool - A retired couple may be quite happy not to have the costs of looking after a pool, but its absence – either private or communal – very much restricts the letting potential.

Transport - For private holidays and permanent living, the advantages of character may well outweigh the cost of an occasional long drive from the airport, but the holiday-maker renting a villa will demand a maximum of a one-hour drive.

Finding the right home for you

Once you’ve decided on the type of property most suitable for your needs, the next step is to find it.

Research before you travel - Before going to view properties, you can find a lot of information on the rental business on the internet and in magazines, such as Spanish Magazine. A session on your computer will allow you to examine a range of sites that will give you an overview of the types of property available for rental in your area and rental prices being asked. Later, when you look at rental contracts with the costs of management and maid service, you will be able to ascertain the net rental income that you can realistically expect.

Deal with a registered agent - Good overseas estate agents have a great deal of experience, built up over many years. To avoid the cowboys, deal with an agent who has submitted his firm for scrutiny by one of the large organisations and who is committed to the code of conduct of that organisation. In the UK, the largest and longest-established organisation is FOPDAC, the Federation of Overseas Property Developers, Agents and Consultants. Their website (www.fopdac.com) lists members and the areas in which they operate.

Take independent legal advice - It is a good plan to make contact with an abogado (solicitor) who is practising and registered in the area where you expect to find a property.With him or her on your side, you are equipped to get advice quickly when you think you have found your ideal property and when action is necessary to secure it.The golden rule is to be in control of the situation at all times, and not to allow yourself to be rushed into signing something without adequate consideration.

Demand the information that you need - When dealing with knowledgeable professionals, you should be able to find answers to all the questions you need to ask to arrive at your decision. Most of Spain has a well-developed property market, and in almost every location there are properties that have been let for many years, so information is available on rental rates actually achieved and average occupancy rates (weeks per year). If you are not getting answers to your questions, maybe you are asking the wrong person!

Location - Look again and again.You will first see your property at a particular time of day and in a particular week. If you visited in the morning, look again in the afternoon – maybe that hillside cuts out the sun from the terrace later in the day. If you visited first in August, when the village was full of energetic holiday-makers, see if they are still attracted at the end of the season and out of season.

What you want from your property

It is time to do the sums. Property is a long-term investment and is not normally for those who seek to make a quick buck. Rental returns that seem almost too good to be true are sometimes bandied about. Often, they turn out to be just that.

In the short-term, properties with ‘guaranteed rental returns’ may seem a wise choice, but take care – developers have been known to inflate property prices in order to create a margin out of which they can subsidise rental rates for an initial period. After that, you are out on your own.

However, the good news is that, taking a long-term view, the returns on property in Spain have been shown to outperform many other options open to UK investors. Taking good holiday locations over the past ten years, net rental returns have averaged eight per cent and property values have increased at 14 per cent per year, giving a combined annual return of 22 per cent. Property is a secure investment that has always moved up in value ahead of inflation.

Finally, it is of course important to factor in occupancy rates, which vary from season to season.