Types of Real-Estate Investments: Holiday Homes
Article: advantages and disadvantages of holiday-home investment.
From a cottage on the beach to a pad in the city, holiday homes can be found wherever people like to visit. Investing in one can provide you with cheap holidays – and a rental income to boot.
Holiday homes, also known as vacation homes, weekenders or bachs, are usually pictured as rural retreats but they can be situated anywhere people like to visit, and on any scale from a large beach hut to a penthouse apartment.
They are typically used by their owner for some part of the year, and let out to others the rest of the time, typically for short stays of 1-28 nights.
Many holiday homes are niche accommodations such as ski lodges, fishing huts or hunting cabins, but others are simply nice homes in lovely areas.
Image source: HolidayHouses.co.nz
Advantages of a holiday home investment
- Rental income may be higher than on residential lets
- You can use it yourself
- May be a retirement home, either year round or for part of the year
Disadvantages of a holiday home investment
- Bookings (and thus income) may vary widely month to month and year to year
- More work than a long-term residential rental (cleaning between use, damages are more likely, constantly need to find new bookings)
- May need to hire both a property manager and/or a specialist letting agent if you do not wish to do this work yourself
- Highest rental income periods may be when you want to use it – e.g. school holidays
- You may feel tied to spending your own holidays in this same destination
What to look for when investing in a holiday home
In addition to the standard issues affecting investment real estate , if you’re looking for a holiday home, you should also consider:
Location should be:
- An area that is either constantly popular or increasing in popularity
- An area you would like to visit regularly
- With easy access to important local facilities, e.g. beach, ski slopes, shops
- Near infrastructure, such as paved roads and airports
Property should include:
- Good facilities for the type of use – e.g. ski room, kitchen, car parking
- Areas where extra beds could be added – e.g. sofa bed in the lounge or master bedroom, bunk-beds in a small bedroom
- Bathrooms and dining space suitable to maximum number of guests
- Fire escapes and other safety features
- Fittings and furnishings are suitable or can be replaced easily – for example, sofas still have fire safety note attached
- Looks good – needs to be instantly attractive as hidden charms are hard to sell
Ideally, the investment should be a property that you would enjoy using yourself and could use with your family or friends (saving you money on your own holiday accommodation spending).
Local rules and regulations
- Is there a law regarding a maximum capacity in the letting?
- What are the requirements for facilities and safety measures, such as fire blankets?
- Cost of inspections?
- Investigate the cost of visitor tax and other taxes.