Holiday rentals have one significant advantage over traditional buy-to-let properties. During the peak holiday season, your guests will pay in a week what long-term tenants pay as monthly rent. For investors who can secure a property in a popular destination, the holiday home can pay for itself. The annual return from a holiday rental could be potentially higher than what landlords receive from a buy-to-let home.
However, not every holiday home investment is a profitable commitment. Indeed, seasonal rentals may not generate sufficient income to cover their annual payments and maintenance bills. Additionally, investors may want to make use of the property during the peak season, which inevitably reduces its profits. Offering all-year-round rentals could ensure you can recoup your losses. But it also requires extensive assistance and maintenance. In short, a lot of investors struggle to turn a holiday home into a reliable source of profit. Here is what you need to consider when you invest in a holiday rental.
Weight out your options
A holiday home is an investment, and as such, it belongs to a clear strategy. You are unlikely to make the most of your rental if you don’t define your goals for long-term and short-term profits. Should the holiday home be part of your family financial plan for many years, you can find a balance between using the property and letting it to holidaymakers. In the long-term, you will be able to recoup your costs. However, if you intend to make a profit rapidly, you can’t afford to waste peak season time for your personal entertainment. Understanding what you want to achieve and how long you are allowing yourself to reach your goals will highlight the best course of action.
Know local regulations
Where’s the best place to buy a holiday home? Ideally, you want to aim for a popular destination where visitors are more likely to pick self-catering accommodations. Nation-wide, rentals in the countryside – in the mountains along the coast – are a favorite. When it comes to international investments, however, the sky’s the limit. If you’re going to buy a property abroad, you need to understand the local regulations. For instance, if you’re aiming for a self-contained apartment in Singapore, you may read about house and development board properties. As a rule of thumb, most HDBs are affordable by design without compromising on luxury and convenience. Yet, while you can buy a property, you won’t be allowed to use it as a rental unless you are a Singaporean citizen. Some affordable rentals in Italy will not require any citizenship check. But the authorities ask that you live in the property for a minimum period each year. The bottom line: Do your research!
Always go the extra mile
Holiday rentals need to exist in a competitive environment. What makes your rental a better choice than a hotel suite for holidaymakers? The answer is: The services you offer. Being willing to go above and beyond to provide unbeatable hospitality services, such as a concierge who can help your guests and sort out their holiday plans, can give you the advantage. Admittedly, setting up a local concierge service for your rental comes at a price that you can recoup in your rent. Holidaymakers are happy to pay more if it means enhanced luxury treatment.
Keep on top of infrastructure & public transport news
Most holidaymakers rely on public transport to get to their rental and visit the local area. Finding a property that is easy to access from the main airport and train stations can make a great deal of difference. Ultimately, nobody wants to waste more time than necessary to reach their holiday villa. An apparently remote location, for example, should remain accessible to travelers – that’s where your concierge service could be useful. It’s a good idea to keep updated about all infrastructure and transport plans around your rental. Should the local authorities change the bus routes, it could affect your guests and the profitability of your investment.
Invest in an inviting and manageable decor
A holiday property needs a subtle interior decor, that is both homely and manageable. Too many holiday homes make the mistake of creating a cheap and impersonal decor, which affects their profitability. If you want people to spend their holiday in your property, you need to create a positive first impression. Aiming for the WOW factor through elegant furniture and high-quality appliances creates a high-return investment.
A holiday home can be a fantastic financial endeavor, as long as you are willing to invest in its profitability. Each investment needs to be nurtured to grow, from adding luxury services to understanding how the local regulations can work in your favor.