Who doesn’t love to travel? All around the world, the popularity of travel has been increasing over the last few years. Fueled in part by social media, tourists seek to explore even more destinations, turning their disposable income into unique experiences.
The pandemic might have curbed this global trend, but its impact on domestic travel and tourism might not be as severe. Recent statistics show that Britons made over 50% more domestic visits than foreign trips in 2018. We love our ‘staycations.’ As long-term restrictions ease and the economy eventually improves, domestic travel will rebound more quickly.
And if you happen to frequent a specific part of the country, it might seem like a good idea to buy some property there. After all, when you own your accommodations, you’re no longer paying rent to someone else for the privilege of enjoying your stay. Many people even let these holiday homes when they aren’t using them personally, thus turning them into an additional source of income.
Is it possible to enjoy the best of both worlds? Here’s a closer look at how buying and letting a holiday home could work out for you.
Home versus investment
Millions of people head to the beaches of Cornwall or Devon each year, many of them repeat visitors. But just because you keep coming back to a specific destination doesn’t mean you want to live there. And yet owning property is a form of commitment to an area.
People can buy a vacation property simply to reserve their spot in a popular destination, enjoying the ability to head out of town and relax in private anytime they want. There are others for whom personal use tends to be a secondary consideration. They see this as more of an investment and are concerned with profitability. For these investors, the feasibility of letting the property and recouping your mortgage payments is a priority.
Where do you fall along this spectrum of owning a home versus managing an investment? How often do you vacation in one spot, and for how long? Do you see yourself coming back every year, and for how many years in the future might this be your ‘staycation’ destination? These might be idle questions for casual travelers, but when you want to buy a vacation property, they take a central role.
Maintenance and management
Whether you aim to maximize your profit margins from letting a vacation property or are content to earn something while enjoying part-time use, there are costs to be considered. Just like any responsible landlord, you’ll have to cover the basics: EICR, home insurance, maintenance of year-round heating, and repair of any damage incurred through wear and tear.
You might want to undertake further improvements or additions to enhance the property. Doing so might require you to consult with local authorities for approval. It can also entail wrangling with local contractors to get a good deal.
After that, you’ll want to find ways to list and promote the property. That means hiring an agent with experience working in the area, or else doing the work yourself. Research the rates of similar properties in the area, using popular sites such as Airbnb or HomeAway. Find out the peak season and expected occupancy rates, and you’ll have a better idea of how to go about pricing.
Covering these tasks won’t be easy for the first-time landlord. And it only gets harder if you’re inclined to the investor’s perspective and want to maximize your returns. You’ll need to spend more time and effort to make sure you’re getting a good ROI. Professional property managers are available to do this job for you, but their rates will cut further into your profit margins.
Perhaps the biggest question to address is also the most personal one: how does this fit into your lifestyle? You may be a frequent traveler, and you might tend to visit the same place repeatedly over the years. But are you really after the same experience each time?
People who love a specific destination might nevertheless enjoy some variation across their many visits. Sometimes, you want a place to stay along the beachfront. Other occasions will call for more inland adventures or seasonal attractions. Having the flexibility to choose different accommodations each time will let you customize your experience.
Also, ask yourself how predictable your vacation time might be. If your job may grow more demanding over time, you’ll enjoy less time off. You could be forced to occupy your property during peak season, which reduces your potential earnings.
If you can afford to take the occasional loss while enjoying a second home in your favorite part of the country, a holiday makes sense. Review these considerations carefully before you take the plunge, and this long-term commitment will prove worthwhile.