Buying property abroad: Portugal

Portugal is an excellent choice if you are looking to explore new real estate investment opportunities outside of the United States. The small country located in Western Europe has a warm climate, low crime rate, and a relatively low cost of living. 

Buying a property in Portugal can be a great financial investment. You can use it to diversify your portfolio, hedge against U.S. inflation, and gain exposure to the growing EU market. It can also serve as a retirement plan. Currently, there are no restrictions for American citizens who want to buy a home or multiple homes in this country. 

Location means everything when it comes to buying a home in any country, and Portugal is no exception. Lisbon and Porto attract many tourists each year and, therefore, are the ideal options for those who are looking to buy a property in Portugal and rent it out on Airbnb.

Lisbon luxury property prices increased by 2.4 percent compared to last year, and will likely continue to rise, The Portugal News reports. Home prices in coastal areas, including Porto, are also increasing. However, the cost of buying a property in Portugal is still much lower than in the United States. 

One-bedroom and studio apartments in historic districts of Lisbon and Porto are the perfect candidates for an investment property. Those types of properties will have the highest rental yield per year, which is the total percentage return you can expect to receive from renting out a property. According to Idealista News, the residential rental yields are approximately 4 percent in Porto and above 3 percent in Lisbon. 

On average, a 1-bedroom and 2-bathroom duplex apartment in Porto costs approximately €270,000 ($292,002). The short-term rental return for such property will be around 5.02 percent per year. Studio apartments in the historic center of Porto can be found starting from €195,000 ($211,891). These units also have a high appreciation potential and will bring you about 5.48 percent per year in approximate rental returns. 

To buy a property in Portugal, you will need a real estate agent and an attorney. An attorney will help you navigate the legal process and represent you at closing. The average closing costs and fees will be about 7-10% of the property price. In addition, once you become a homeowner, you will pay between 0.3-0.45% in property taxes. 

If you would like to buy an investment property in Portugal, please email us at anya@verusnyc.com. We will refer you to a local  broker and provide you with our full assistance in this process. 

Resources:

“Buying Property in Portugal: The Ultimate Guide,” (Get Golden Visa, 2022)

“Lisbon luxury property prices up 2.4%,” by TPN/Lusa (The Portugal News, 2021)

“Investing in the rental market: the best areas in Lisbon and Porto,” (Idealista News, 2020)