Knowing whether a dwelling is a good investment is crucial before purchasing. Investing in a dwelling can be one of the most profitable and secure operations in the long term. However, to do it correctly, it is not enough to focus solely on the price or on whether it “seems like an opportunity”. At BTTEstudio, we analyse whether a dwelling is a good investment by evaluating each property with a technical methodology in architecture and interior design that allows us to identify risks, calculate actual returns, and anticipate future value after refurbishment.

Here is our professional checklist with the key points you should evaluate before buying.

1. Calculate gross and net profitability

Gross profitability is the first indicator that an investor calculates, but net profitability is what truly defines whether the operation is worthwhile.

Gross profitability:
Annual income / purchase price.

Net profitability:
Annual income – actual expenses (IBI, community fees, insurance, IRPF, maintenance, special assessments, financing…) / total cost of the operation (purchase + refurbishment + taxes).

Typical example in Valencia:
A dwelling that seems profitable with a 6% gross return may end up with a 3.5% net return after expenses. Therefore, it is advisable to analyse it precisely.

2. Realistic and well-estimated refurbishment costs

The condition of the dwelling and the possibilities for improvement are crucial for its future profitability.

Aspects to check:

• Condition of installations (electricity, plumbing, air conditioning).
• Quality of the structure.
• Need for redistribution.
• Type of suitable materials.
• Quality level according to objective (rental, appreciation, sale).

At BTTEstudio, we always carry out a construction estimate based on actual measurements, not approximations. This avoids surprises and allows us to know how much the property will actually cost to bring it up to standard.

3. Structural condition and age of the building

The structure and age of the building are factors that impact both safety and long-term costs.

What we typically review:

• Type of structure (reinforced concrete, wood, metal).
• ITE (Technical Inspection of the Building) up to date or unfavourable.
• Dampness, cracks, pathologies.
• Possible upcoming special assessments (façade, roof, lift).

An old building can be a great opportunity, but it can also be a risk if not analysed with technical criteria.

4. Actual urban situation

Before investing, it is essential to check:

• Acoustically Saturated Areas (ZAS).
• Heritage protection (PEC, Ciutat Vella, Catalogue).
• Compatibility of uses (very important for tourist housing, offices, or commercial premises).
• Urban impacts: alignments, loads, easements, future planning.

A cheap property can end up being expensive if you later discover that you cannot refurbish it as you wanted or that it is subject to special protection.

5. Actual demand in the area

Profitability depends on the demand in that location. Investing in Ruzafa, El Carmen, or Benimaclet is not the same as investing in emerging neighbourhoods like Ayora or Patraix.

To analyse demand:

• Average rental price per m².
• Average time of advertisement occupancy.
• Tenant profile (families, students, expatriates).
• Tourist demand (if permitted).
• Forecast of area appreciation.

An area with slightly lower immediate profitability but with future potential is usually the best strategy.

6. Possibilities for redistribution

This is where an architect makes a difference.

A dwelling with a poor appearance but good structure and potential distribution can become a property of great value.

Key aspects:

• Possibility of opening the kitchen to the living room.
• Add an en-suite bathroom.
• Expand rooms by reducing hallways.
• Reorganise walls to gain light.
• Optimise wardrobes and storage.

Conclusion:
Design can increase profitability by between 15% and 40% depending on the initial condition and target audience.

7. Fixed costs: IBI, community fees, and special assessments

Many investors are guided by the purchase price, but the actual operation depends on:

• Annual IBI.
• Community fees (very important if there is a lift or central heating).
• Approved or anticipated special assessments.
• Building reserve fund.
• Community insurance.

A community with expenses of 80–120 €/month can completely change the net profitability of the investment.

Final tip for investors

A dwelling that appears less attractive but is well distributed is a better investment than a dwelling with good finishes but poorly organised.
Intelligent redistribution is where the most value is generated.

To assess a real estate investment, consult the market reports from the Colegio de Registradores.

You may also be interested in: full refurbishment and common mistakes in full refurbishments.