Investing in a holiday

Investing in a property at your favorite holiday destination is an attractive option for many investors during the summer holiday months. It’s important to remember, however, that for the investment to perform well it needs to be managed correctly.

If you have purchased a holiday home it is important to think of it as any other investment. Due to the nature of these properties, there may actually be the potential to receive greater returns over the year than if it was tenanted permanently.

In the peak holiday season, coastal or country property can generate a great deal more than would be possible at other times throughout the year.

‘Mates rates’ for friends who wish to rent the property should only be considered if the rental property was going to be unrented during the period. You could also offer a ‘stand by’ rate which means that if on the Friday morning the property is free, they can utilise it for their holiday weekend at a lesser rate.

It also pays to keep in mind that expenses with holiday letting are often higher than permanent tenancy. Maintenance costs, including cleaning after each tenant vacates the property (if you do not charge a separate cleaning fee), will be greater due to the high turnover of tenant occupancy.

Many investors fall into the trap of viewing their holiday investment as a place where they can escape during Christmas or Easter. This is fine if you are prepared to miss the higher income generated during peak periods.

A property located in a popular holiday destination has the potential to give excellent returns for investors willing to sacrifice their access during these periods.

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