Is a vacation home purchase on your property portfolio horizon? On this issue, there several areas to consider.
Buying a rental property is a brilliant investment if you manage to get it right. You could see a quick return on your vacation home purchase investment if you get the right property and you’ll soon be turning a healthy profit.
When it comes to investment properties you’ve got a few different options. Letting out a full-time home is a good option for some because you’ll have longer term tenants. However, it might be more difficult to find people to fill it.
The other option is to get a holiday home to rent out. The benefit of a holiday home is that you can charge higher rates.
You might not have somebody in there every week of the year but it won’t matter if you’re making up for it with a higher rental.
It also means that you can use the holiday home yourself so you’ll be making savings on your vacation every year.
If a vacation home purchase sounds like the kind of investment you’d be interested in, check out these tips to help you avoid losing your money.
When Looking At Vacation Home Purchase, Choose The Right Home
When it comes to choosing a holiday home, making a bad decision could cost you dearly. There are plenty of things to consider here so don’t rush into anything too soon.
The first thing you need to think about is the geographical location. Remember, you’re trying to appeal to people on their vacation which means fun, leisure, and relaxation.
Picking a property in a low tourism area may be a bad idea because you won’t attract people going on vacation and looking for interesting things to do.
If you pick a tourist hotspot you’ll pay more for the property but you’ll likely rent out the vacation house for more weeks of the year. When looking into a location think from the point of view of a holiday maker.
If you buy a place in an area that’s on the decline, you’ll see some success for a few years. However, after that you’ll be left with a dead weight that’s only costing you money.
If you’re clever about it, you could find somewhere in an up and coming area. That way, you’ll be able to buy the property a lot cheaper but once that area is thriving, you’ll be making big money.
Once you’ve found a good area, you need to start looking at the type of property that you’re going to buy. Decide who you want to be staying there.
If you’ve got a good amount to spend, look for a condominium for sale. You’ll massively increase the number of guests you can have staying and make it less likely that the property will ever be left completely empty.
It will also probably come with more facilities like a swimming pool which make it more attractive to prospective customers.
Alternatively, you can look into finding somewhere that is more suited to family vacations. Only go for this option if the location has lots of activities locally that families would be interested in.
You aren’t going to rent to families in a party hotspot. Large cottages are great when you’re looking for a family vacation home to rent out.
If you’re looking to make a larger investment, consider a beach house in a popular location. It will be a more costly vacation home purchase but if you can afford it, you’ll soon see a good return.
Another great idea for people looking to make large investments is a home for group vacations. If you can afford a home for around ten to twelve people, you’re sure to make some big money.
You can push up the prices quite a lot because there will be so many people staying there. View a potential rental with an eye on maximising bed space. Rentals can be designed a little differently with more beds or bunks in one room, cos it’s for a vacation not full-time living.
A fairly new area that you could consider is business travelers. With the rise of globalism, there are more people than ever traveling for work.
If you can get a nice apartment that in a city that is a center for business and you can charge premium rates to business people for short stays.
The biggest reason that people tend to buy a holiday home to rent out is that it gives you far more flexibility if you want to use it yourself.
If you buy a residential home and rent it it, there will always be somebody living there full time so you can’t use it if it takes your fancy.
When you’ve got a holiday home, you can stay there with your family whenever you like. You also have the option of moving in full time. Many people use it as a revenue generator for a while and then retire there when they’re older.
Timeshares were very popular a few years back but now everybody that owns one is trying to get out as fast as they can.
In fact, there are so many people trying to sell them that scam artists have started preying on them. They tell timeshare owners that they have a buyer and they need some administration fees. Once the fees are paid, the owners never hear from the scammers again.
Timeshare salesmen are notoriously persuasive and so many people end up buying a timeshare when they didn’t really have the intention of getting involved in the first place.
Once you’re in, it’s notoriously hard to get out of them as well because nobody wants to buy them. That’s how scams have become so widespread because people are desperate to sell them.
It also makes it impossible to move up the property ladder in future. There are also a lot of hidden fees on top of the mortgage payments so you’re likely to end up stuck with a property that is just losing you money every year.
Vacation Home Purchase Abroad
Investors often make the mistake of buying a vacation home abroad because they think they’ll be able to charge higher rents, but there are significant downsides.
The laws about property ownership are different everywhere and you could get caught out if you’re not on top of all of the rules and regulations.
You will also be removed from the property so you can’t really monitor what is happening with it. If anything were to go wrong, you aren’t in a good position to sort it out.
Invest in a Property Manager you can trust or buy a rental closer to home.