International investors looking to buy property in Southern Europe are often drawn to Italy’s headline-grabbing 1-euro house programs. But behind the eye-catching price tag lies a more complex decision. These schemes typically come with strict renovation timelines, financial guarantees, and uncertain restoration costs. By contrast, distressed properties priced between €20,000 and €50,000 can offer clearer legal obligations, greater control over renovation scope, and a more predictable path to returns. We asked industry experts to weigh in on which option delivers stronger ROI for foreign buyers entering the Italian and Spanish real estate markets.
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Favor Flexible Bargain Homes over One-Euro Offers
I work daily with international clients — most of them retirees — looking to buy property in Italy and Southern Europe. I’m Italian and have hands-on experience navigating Italian bureaucracy, local municipalities, and real-world renovation dynamics.
While the Italian €1 house scheme has captured global attention (and plenty of media storytelling), I generally discourage it for my clients. The core issue is legal and financial rigidity: buyers are contractually required to complete renovations within strict timelines, often posting guarantees of €5,000-€10,000, while navigating fragmented permitting processes (SCIA, conformity checks, seismic and energy compliance). These properties are usually in areas with limited infrastructure, scarce contractors, and slow municipal response times — factors that inflate costs, delay delivery, and erode both ROI and quality of life.
For many international buyers, the real “sweet spot” is instead distressed assets in the €20,000-€50,000 range — but only for people with very specific ideas and genuine enthusiasm for the process. The key advantage is that these purchases sit outside special incentive schemes, meaning fewer contractual constraints, greater flexibility in renovation phasing, and a more standardized ownership transfer. Permits are still required, but the process is generally more predictable.
That said, realism is essential. Labor availability in Southern Italy can be slow, renovation timelines often stretch, and buyers must factor in ongoing liabilities such as IMU (property tax), TARI (waste tax), and municipal obligations — even on properties that are not yet fully usable.
Crucially, in many of these regions, prices for properties already in good, move-in-ready condition remain very low. This makes it vital to weigh pros and cons not only financially, but also practically: complexity, stress, time to occupancy, and alignment with lifestyle goals.
In short, these opportunities can work — but they are not universal solutions. The right choice depends on objectives, timelines, and tolerance for complexity. My strongest advice is to speak with local professionals who are not incentivized to sell, and to fully understand the legal, financial, and operational implications before committing.
Federica Grazi, Founder and Managing Director, Mitos Relocation Solutions
Choose Predictable Costs and Clear Obligations
The specific financial and legal reason that often tips the balance toward investing in distressed assets priced between €20,000-€50,000 rather than a “1 Euro House” scheme in Southern Europe is the certainty and predictability of total investment cost and legal obligations.
With 1 Euro House programs, the symbolic purchase price masks mandatory renovation commitments, strict completion deadlines, required insurance deposits, notarial fees, and sometimes municipal guarantees that can collectively dwarf the initial outlay. Buyers are typically required to begin renovation within a fixed timeframe and complete extensive work to comply with local building codes, or risk forfeiting deposits and even ownership. These legal conditions and compliance costs can be unpredictable and vary widely by municipality, making total project costs difficult to forecast and manage effectively.
In contrast, distressed properties in the €20,000-€50,000 range usually come with established title, clearer due diligence, and fewer conditional obligations tied to government restoration programs. Because their renovation requirements and legal liabilities are defined up front through standard sale contracts, investors can more accurately budget for refurbishment, secure permits using familiar processes, and design exit strategies such as resale or rental without the looming threat of municipal forfeiture. This legal clarity and cost transparency can materially improve return on investment by reducing risk and avoiding unforeseen compliance penalties that are inherent in many one-euro schemes.
Andrew Izrailo, Senior Corporate and Fiduciary Manager, Astra Trust
Secure Bankable Leverage on Standard Deals
Distressed assets priced between €20K and €50K often align better with mainstream financing than 1 Euro House properties. Banks in Italy and Spain can assess them using comparable sales, clear security, and clear renovation budgets. Sensible leverage boosts equity returns and helps smooth cash needs during works. Some lenders also release funds in stages, which reduces money tied up at any one time.In contrast, the 1 Euro House path can be hard to finance because the purchase price is low while the renovation budget is high and uncertain. Better financing access improves both ROI and deal certainty. Engage lenders early to lock loan terms before making offers.
Seek Better Risk-Adjusted Returns
Over time, distressed assets priced between €20K and €50K tend to deliver stronger returns for the level of risk taken. Entry prices reflect known problems, which creates a margin of safety once repairs and finding tenants are handled. Net yields after renovation often beat local averages, while vacancy and resale risks can be managed with careful planning. In larger cities across Italy and Spain, deeper rental demand and better ease of resale further improve the risk return balance.The 1 Euro House path can hide structural and permit risks that widen results. For investors who want steadier outcomes, the distressed route usually offers a clearer path to balanced gains. Build a simple risk adjusted model for both paths and pick the one that fits your risk limits.
Confirm Real Incentives Before You Proceed
The 1 Euro House strategy can excel when municipalities in Italy and Spain attach strong, targeted incentives. Local programs may offer tax breaks, fee waivers, or grants that cut renovation costs and shorten timelines. Some towns provide help with permits, utility hookups, or business licenses for hospitality use. When these supports are real and reliable, they can flip the ROI math in favor of the 1 Euro House approach.The key is confirming that incentives are funded, open to international buyers, and aligned with the planned use. Clear incentive design can turn a complex rehab into a bankable plan. Verify every incentive in writing and build them into a careful budget before you proceed.
Prioritize Faster Paths to Cash Flow
Distressed assets priced between €20K and €50K often reach rental readiness far sooner than properties from the X Euro House scheme. Many need cosmetic or medium repairs, not full structural rebuilds that can take years in Italy and Spain. Faster leasing brings earlier income, which reduces holding costs and interest costs. Speed also allows quick testing of tenant demand and pricing, so the plan can be adjusted in real time.The 1 Euro House route can create long wait times due to reports, heritage approvals, and complex works. Earlier cash flow over the hold period lifts overall ROI and lowers stress on cash reserves. If speed to income is critical, focus on distressed assets that can be rented within months.
Target Authentic Charm for Premium Upside
The 1 Euro House route can outperform when restored homes capture a true heritage premium. Some historic centers in Italy and Spain attract steady tourist demand and high willingness to pay for authentic spaces. When design quality and location align, nightly rates and resale values can beat market averages. The premium rests on scarcity and charm, which cannot be copied by newer blocks.This path works best where town branding, cultural events, and good access make the property part of a unique experience. It requires careful planning and local approvals, but the payoff can justify the effort. Identify towns with proven heritage demand and secure skilled restoration teams before committing.
