🏠 Introduction

Buying a property is easy.
What’s difficult is knowing whether it’s a good investment.

Many buyers let emotion guide their decisions — but a smart investment is built on analysis and numbers.

In this practical guide, I’m sharing the key criteria we use at Purple Balcony to evaluate a property before deciding to invest.

1️⃣ Where the real value of a property comes from (Location)

Location remains the nº 1 criterion in any real estate investment.
Look for areas with proven growth: new services, transport links and commercial development.

Analyse rental and purchase demand in the area — neighbourhoods close to fast transport or major urban centres tend to appreciate first.

💡 Real example:
In Barreiro, areas near the ferry stations gained value thanks to the direct connection to Lisbon.
A property worth €120,000 three years ago can now be valued at around €160,000.

2️⃣ How to predict renovation costs and profitability

A low asking price may hide heavy renovation work.

Light renovations: €300–€500/m²
Full renovations: €700–€900/m²

To understand whether the deal is worth it, use this simple formula:

Expected return (%) = (Sale price – [Purchase + Renovation + Costs]) ÷ (Purchase + Renovation + Costs) × 100

💡 Practical tip:
Aim for minimum 20% margins in buy–renovate–sell projects.
For rentals, the ideal target is 5–6% annual gross yield.

3️⃣ What separates a good deal from a trap

Not everything that looks cheap is a real opportunity.

Always check:

• Urban and tax history of the property

• Housing licences and previous works

• Hidden costs: IMT (property transfer tax), Stamp Duty, deed costs, service charges, maintenance and capital gains

A property that looks inexpensive can become costly if it carries legal or technical problems.

4️⃣ Real example from Purple Balcony

In one of our recent projects on Rua Henrique Andrade Evans, we acquired five properties for €300,000.
We carried out conservation work on three of them, at a total cost of €120,000.
The projected sale value is €600,000, representing a €180,000 gross margin, plus a 600 m² plot retained in our portfolio.

💡 The difference between risk and opportunity lies in analysis — not luck.

5️⃣ Conclusion

Evaluating a property requires a balance between logic and vision.
Those who master the numbers gain the freedom to choose better and take fewer risks.

👉 Want to know more about Purple Balcony’s upcoming projects and invest with us?
Contact us here.

✍️ About the Author

Pedro Gonçalves
Founder of Purple Balcony, a real estate developer specialised in purchasing, renovating and selling properties with shared profitability.
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