Investing in a holiday rental property is a rather different process than buying a second home. The search, viewing and purchasing process all requires a completely different mind-set, with a focus on how to maximise income rather than on the purchaser’s personal taste.
This is not something that comes naturally to every buyer, as Chris White, Founding Director of real estate agency Ideal Homes Portugal, explained.
“Many buyers set out to buy a holiday home as an investment property, then end up choosing one that they themselves would like to live in. Of course that’s fine if the plan is for the purchaser to one day move there, but those looking for holiday rentals purely as a means of income generation need to be a little more hard hearted in their outlook.”
With those thoughts in mind, White has suggested his top five tips for helping buyers to profit from their holiday rental property. We have added a few suggestions of our own.
Lock in the location
First, as with everything in the property world, it is all about location. Holidaymakers want somewhere that is easy to reach from the airport, has a swimming pool and that is near a beach. In some European resorts such as the Algarve in Portugal, a nearby golf course is also a must. Additionally, local facilities such as shops, restaurants and bars should be close, ideally within walking distance.
Buy bonus features
Once you’ve found a good location, look for the properties that stand out from the crowd due to bonus features. It could be a hot tub in the garden, an attractive roof terrace or a stunning sea view. Whatever catches your eye will be sure to catch the attention of holidaymakers searching online for the perfect rental property.
Remember your returns
Think about the kind of yield you need from your rental property, and keep that firmly in mind when viewing potential accommodation. Check statistics from the local government concerning tourist arrivals and note the trends. Yields of up to 10% are possible with the right property in the right location.
Perfect that paperwork
Every country has its own rules and regulations on rental properties. If you are investing in overseas property then you should also invest in a local, experienced law firm who can advise you in your own language. Tax issues should be taken into account before signing on the dotted line, and you should know how easy it would be to escape from your purchase in an emergency – and the cost.
Take a test drive
This is perhaps the most enjoyable step in the process. Buyers should test out their new investment for themselves and view it through the eyes of holidaymakers. What are its outstanding features, how close are the best restaurants and what does the kitchen need to be equipped with? Discovering these items will help the buyer to ensure that he/she has relevant information to hand when it comes to promoting the property as a holiday destination and will ensure that those renting it are happy that their every convenience has been catered for, maximising their chances of returning the following year.
Andrew Batt, International Group Editor of PropertyGuru Group, edited this column. To contact him about this or other stories email andrew@propertyguru.com.sg