We recently talked about whether you should rent out your property as furnished or unfurnished and one of the options for furnishing would be if it was a holiday rental.
It is coming up to that time of year when we think about summer and holidays and having a holiday rental could make perfect sense, especially when you see the high rents that landlords charge over this time. But you have to take all facts into consideration, especially how long it will likely be vacant out of peak season. It really depends on the location. Some areas are popular for holidaymakers all year round, so it definitely makes sense to invest in these areas.
Let’s look at some ways make the most out of the investment.
Buy what you can afford.
This is essential, whatever the investment. But you may need other sources of income to pay for it. Unless it is a popular tourist area, you probably won’t collect rent for all 52 weeks of the year.
Budget for additional costs.
If you buy a house by the sea, remember sea water will cause extra wear and tear on the house. If the place is more than an hour away you will most likely need to use a Property Manager. It is wise to talk to local people and get an idea of what costs are involved in keeping a place in the area in good condition. What about tax implications on owning a second home? Will that have an impact on costs? So make sure you set aside a chunk of money for costs – then double it!
Will it make a good rental?
Make sure that the property will be appealing to the widest group possible and that it is furnished tastefully in neutral colours. How many people will it sleep? Make sure that you have numerous sleeping options, from beds to air mattresses, trundle beds etc. The more people it can sleep, the wider net you cast. Is it in the middle of the action? Is it close to the beach and the shops? These rentals will cost more, but they are more popular.
All seasons, all kinds of weather.
Make sure you know what it is like throughout the year in all seasons, will that fantastic beach front property turn into a freezing, windy, unpleasant place? Visit the area in all seasons and see what you think.
Consider a family investment.
A joint family investment can start wars! If you think that you and the co-owners will be able to handle the stress of buying, selling and renting make sure you build precautions into the contract. Make sure everyone knows who is responsible for what, what percentage everyone owns and what percentage of the income you will each receive. If you put 70% of the money in, will you get 70% of the money out? What if you want to sell your share?
These are all things to think about before committing. What other areas do you need to look out for when buying a holiday home for an investment?