For those who think buying a holiday home, to rent, is an easy
way to make a profit on your investment you should be aware that
it isn’t as easy as it sounds. To start with, there are over
500,000 holiday home owners in the UK - and most of them rent
out their property. You can expect high out goings, management
commission and fees, insurance bills, and the usual household
bills.
For anyone considering buying a holiday home, to rent, these six
pieces of advice will be invaluable.
Location Choosing a good location is vital,not only because you
want a location which is popular with holidaymakers, but also
one which is not overly competitive. Destinations like Florida
and Spain have, over the years, become highly competitive with
thousands of holiday villas available for rent. It is important
that you look for facilities close to the home - restaurants,
bars or shops, particularly since holidaymakers will be catering
for themselves.
Type of accommodation Think about your target customers. If you
are targeting families, then buy a two or three bedroom holiday
villa, near popular family attractions. If it is couples or
small groups you are hoping to attract then look at buying a two
bedroom apartment near shops, bars and restaurants, beaches, and
golf courses. For smaller groups, or groups of adults “space”
will be less of an issue.
Buying a one bedroom apartment will restrict you to couples, or
two adults only. Huge five bedroom houses may sound good, but
for short haul destinations like Spain, a three bedroom holiday
home will suit most holidaymakers, and large houses may put
people off renting your home.
Property Management Employ a management company or be prepared
for hard work. Managing a holiday home involves home repairs,
passing keys to holidaymakers, changing linen when the
holidaymaker departs, garden up-keep, plus dealing with
emergencies such as visitors locked out. Bear in mind that most
property management companies charge commission for getting
holidaymakers to book your home, instead take the responsibility
of promoting your holiday home on yourself.
Property features Keep the property up to date. DVD’s and CD
players are no longer luxuries. Competitiveness is a big issue
for owners nowadays.. no matter where your holiday home is
located, be it Portugal or Cyprus, you have to offer something a
little unique from other owners, perhaps discounted tours, free
car hire. These extras may cost you in the short term, but over
the year it may raise the percentage of bookings that your bring
in.
Insurance & Fire certificates More importantly, fire regulations
mean that extinguishers and flame-resistant furniture are a
must. Contact local town halls to research if you need any fire
certification or complete any legal procedures, before renting
out your holiday home. You must get the right insurance cover
and property management companies often insist on public
liability insurance of £1m plus, costing between £200 and £500 a
year.
Finances Don’t listen to anyone who says they can guarantee you
52 weeks of bookings for your holiday home. Before you buy a
holiday home you must look at how many weeks bookings you
require to make ends meet. This is especially important if you
want to make a profit from your initial investment. Keep your
accounts and finances in order. Much of your costs will be spent
on management fees, holiday home insurance, property repairs,
decoration and essential travel to and from the house - some of
these can be set against tax and offset against non-property tax
bills.
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