Buying a holiday home as an investment
I am often asked whether or not holiday homes make for good and profitable property investments. As with any investment decision, knowledge of what you’re getting yourself into is very important. Moreover, your motive for embarking on this particular investment journey is also important. There are several factors to take into account when investing in a holiday home. With that in mind, let’s examine what you need to know about buying a holiday home as an investment.
What is a holiday home?
A holiday home or vacation property is accommodation used primarily for holiday vacations, as well as temporary housing. Holiday homes are usually second homes used by the owner’s for accommodation during the holiday season. In addition, the owners can lease out their holiday properties for short-term occupation to various guest when they are not using them.
Factors to consider when buying a holiday home
One of the most important factors to consider when buying a holiday home is the location. The look and feel of the general, as well as any additional features will determine how desirable an area is. When buying a holiday home for investment purposes, location and the desirability of the area are very important factors.
Your financial position and your ability to pay for the holiday home are also very important factors when trying to make this type of investment. Keep in mind that you will have to foot the bill for the deposit, conveyancing fees, as well as transfer fees.
In most instances you will have to engage a professional property manager to help you with management of your holiday home. This is especially true if your vacation property is situated far from where you live. Your property manager will be able to help you keep the property in pristine condition, as well as carry our regular property inspections. Moreover, your property manager will help with vetting, screening and selecting tenants.
Ways to make money from your holiday property
You can lease out your property whenever you’re not using it. That way you can earn rental income from the property. There is often high demand for beautiful and comfortable holiday homes in desirable areas. In addition, the income from leasing out during peak holidays season is quite lucrative. However, you might find it relatively difficult to lease out your holiday home during off-peak times.
Ways to find tenants for your holiday home
Firstly, you need to promote your property effectively. Know your target audience and understand their needs. That way you can focus your efforts on meeting those needs in and efficient manner. Moreover, be sure to make use of professional produced visual aids that highlight the key features of the property and its surroundings.
Design and decorate with comfort in mind
One of the biggest reasons people go on holiday is to relax and unwind. Keeping this in mind, it is crucial to put your holiday home together with comfort and relaxation in mind. Go the extra mind to ensure you create a space people will enjoy and wan to return time and time again. The idea is to create a welcoming and luxurious holiday home that provides safety, as well as enjoyment.
Effectively manage the property
Working with a property manager who possesses a vast network of potential tenants is an effective way to quickly get tenants. Do not lose focus on the reason you acquired the holiday home and keep a close eye on the property even when it is vacant. Ensure that you always stay on top of things.
The benefits of buying a holiday home as an investment
- The return on investment on a holiday home in the right location can be substantially high. In some cases, the return on investment can be as much as triple that of a standard by-to-let property.
- Your tenants will stay for short periods of time allowing you to charge premium rentals. In addition, the more you can have bookings the greater your cash flow.
- Another benefit of investing in holiday homes is that you can cut out accommodation costs when you decide to go on holiday.
The disadvantages of buying a holiday home as an investment
- One of the greatest setbacks of investing in a holiday home is the insecure income you earn in comparison to standard buy-to-let homes.
- Demand for holiday homes is seasonal thereby adversely impacting your cashflow.
- In addition, the holiday home property sector is highly competitive thereby further reducing your chances of finding tenants.