HALF A MILLION AND RISING
From www.newskys.co.uk
New research released by the Office of the Deputy Prime Minister shows that the number of English families owning a second home abroad has soared past the half a million mark for the first time.
With the majority wishing to let the property for part of the year, competition in the holiday rental market is fiercer than ever. Stuart Law, managing director of property investment specialist Assetz comments, “Letting international holiday homes is a relatively new trend that has only taken off significantly in the last three years.
Previously, there was a certain amount of stigma attached to renting a holiday home out on the open market, but today’s investment-savvy purchasers are more likely to be embarrassed by failing to make their investment work for them financially.”
To help investors through the minefield, Assetz has compiled the top 10 tips for turning a dream holiday home into a successful business.
1. HAVE A PLAN AND STICK TO IT
Have very clear goals on what you are trying to achieve and how are you going to get there. You should decide on your budget before you even look for a property and decide on the type of tenant you want to attract. Needless to say you should carry out extensive research. You must be absolutely certain that the property is a good fit with your overall strategy.
2. REALISTIC RETURNS
Speak to local letting agents to get a realistic view of the kind of yields you could expect. Calculate all the hidden costs such as decoration/DIY/agency fees etc. Also allow for rental voids; you cannot rely on your property being permanently occupied and must ensure the rental income accrued during high- and mid-season is enough to cover the mortgage and running costs. Check out other rentals in the region to find out which types of properties in which areas are fully booked.
3. HOW WILL YOU MANAGE THE PROPERTY?
If the property is not local you will have to consider using a management company, which can prove costly and will affect your returns. Management companies usually charge around 15-30% of the annual rental income. It is important that the property is maintained to a high standard of cleanliness if you want to generate repeat business, so make sure a local cleaner is employed however you choose to manage the property.
4. CHOOSE YOUR MARKET CAREFULLY
‘Cheap and cheerful’ apartments appeal to most holiday rental investors, but bear in mind you will be competing with a possible over-supply of properties of the same type, as well as other low-cost holiday destinations all over Europe. Spanish holiday apartment owners in this bracket now have to compete with countries such as Bulgaria, which has made a big impact on the budget holiday scene.
5. LOCATION
This is key to a successful holiday let. Ensure the property is within one hour of the nearest airport, which in turn is served by regular flights from the UK running throughout the year. For people to be able to make the most of a three-day break, they must be able to reach their destination quickly and easily. Also make sure the property is close to shops and a restaurant, if not a town.
6. LEISURE FACILITIES
Investors who are seeking year-round rentals would do well to consider a property on a golf course, especially developments offering spas, tennis courts and other leisure facilities that would appeal to families. Access to a pool for properties in hot destinations is essential.
7. LEASEBACK SCHEMES
Leaseback or guaranteed rental schemes can be a great way of earning a minimum income for an agreed number of years, but beware – they do limit the number of weeks the owner can use the property, and yields may not always be enough to cover the mortgage repayments.
8. BE FLEXIBLE
Busy lifestyles and growing demands on our time has meant holidaymakers are no longer happy to be pigeon-holed into one or two week breaks with Saturday changeovers – flexibility is essential, especially out of season.
9.MAKE THE BEST OF THE NET
The Internet is your primary marketing tool, with 77% of all holidays being booked online. While a custom-made website can work, it is better to place your property on a number of the leading holiday-let websites, that will receive a strong flow of traffic from major search engines.
10. NO FREEBIES FOR FRIENDS
Do not give in to the pressure of friends and family who want to holiday in the property for a discount or for free. Your rental yield will soon fizzle away to nothing and you will be left to cover mortgage repayments from your own pocket.
Return to Benalmadena:Lifestyle
