Tenerife is the jewel of the Canary Islands, attracting investors from all over the world with its stable economy, warm climate, and growing real estate market. Villas with ocean views, apartments in tourist areas, and land plots for construction — all of this makes the island attractive for investment. However, beginner investors often make typical mistakes that can cost them time, money, and nerves.
In this article, we will thoroughly analyze the 5 most common mistakes of new investors and provide recommendations on how to avoid them.
1. Underestimating the Importance of Location
Location is the key factor for success in the Tenerife real estate market. Beginners often focus only on the price of the property and external characteristics, forgetting about strategic location.
Typical mistakes:
- Buying apartments far from the beach or infrastructure.
- Ignoring transport accessibility and proximity to the airport.
- Choosing the wrong area for long-term rental or seasonal tourism.
Professional advice:
Ideal areas for investment include Los Cristianos, Adeje, Costa Adeje, and Arona on the southern coast. They ensure high demand for both short-term and long-term rentals. Market analysis and price research will help choose the right property.
2. Neglecting Professional Verification of Documents
Many beginner investors trust the seller or the real estate agency without carefully checking the legal status of the property.
Typical mistakes:
- Purchasing a property without valid licenses.
- Underestimating risks related to land plots or the history of buildings.
- Ignoring debts or encumbrances on the property.
Professional advice:
Before buying, it is essential to consult a lawyer specializing in the Spanish real estate market, check the property registration (Registro de la Propiedad), and make sure all building permits and operation licenses are in order.
3. Incorrect Budget and Expense Calculation
Many investors believe that the purchase price is the only expense. In reality, the cost of real estate includes several hidden items.
Typical mistakes:
- Ignoring expenses for renovation and reconstruction.
- Underestimating taxes and fees (ITP, AJD, notary and registration fees).
- Not considering costs for maintenance, insurance, and property management.
Professional advice:
Prepare a detailed financial plan, including purchase, renovation, document processing, and operational costs. For a villa in Tenerife, a typical budget can be calculated as: purchase price + 10–15% for taxes and registration + 15–25% for renovation and furnishing.
4. Ignoring Seasonal and Tourist Demand
Tenerife is an island with pronounced tourist seasonality. Many beginners buy apartments or villas expecting stable year-round income but forget about seasonal fluctuations.
Typical mistakes:
- Relying only on the summer season.
- Incorrect pricing for short-term rentals.
- Ignoring tourist licensing (licencia turística) required for legal property rental.
Professional advice:
Analyze demand by season, consider average rental rates, availability of tourist licenses, and opportunities for long-term rentals. Areas such as Costa Adeje and Los Cristianos have high year-round demand.
5. Buying Without an Exit Strategy and ROI Plan
Many investors focus only on buying and do not plan further actions. This can lead to liquidity problems and lost profits.
Typical mistakes:
- No clear strategy: long-term rental, short-term rental, or resale.
- Ignoring ROI and payback period.
- Disregarding the resale market and its dynamics.
Professional advice:
Before purchasing, create an investment plan: expected profitability, planned payback period, property management strategy, and sales conditions. For example, a villa with an ocean view in Adeje can pay off in 6–8 years with proper rental and management.
Conclusion
The Tenerife real estate market offers huge opportunities for investors, but without a professional approach, serious risks can arise. Avoid the typical mistakes of beginners, carefully analyze properties, verify documents, calculate your budget, and consider seasonality.
House Tenerife helps its clients invest safely and efficiently in Tenerife real estate: from selecting properties to legal support and rental management.
Invest wisely — and your property will become a source of stable income and reliable profit.
