Betting on the Need to Get Away: Investing in Holiday Lets
“Real estate is real, and it’s always a good idea to put your money in real assets.”
So says sales expert and best-selling author Grant Cardone when asked his opinion for this CNBC piece. What he means by a “real asset” is that it’s tangible with intrinsic, physical properties that provide the basis for its worth. Compare this with “financial assets,” like your savings or investment accounts, that give you more ready access to cash. If that type of easy cash access isn’t a looming concern for you, then dipping your toe in the real estate investment waters may be a good choice.
You may be thinking that it also saddles you with the duties of a full-time landlord and all of the headaches included with that role – especially if you already have a full-time job. While you can certainly contract those duties out to a management company, there is another way you can reduce the headaches of the landlord and still reap the benefits of real estate investing: the holiday let. Read on for insight from Palm Cove Accommodations.
Growing wealth with versatility
Real estate investors are in the game because they expect a return. Most anticipate extra cash flow after all related expenses – mortgage, utilities, upkeep – are covered by the monthly rent, or to realize a gain when exercising the option to sell after the value has appreciated. Another benefit is that when an economic recession occurs that causes rents to soar, the investor will be reaping the benefits of that higher monthly rent, while his mortgage payment (assuming it’s not adjustable) stays the same!
The holiday let provides amplified benefits
Treating your investment home as a holiday let can significantly amplify your rental income. Think of your stay in a hotel room: That per-night cost would be prohibitive for most people as a monthly rental rate, but is expected by visitors for their shorter lodging needs. You can simply charge more for shorter stays, and with frequent visitors, that can add up quickly – even with gaps in rental activity.
The popularity of being the vacation home investor is one reason for the proliferation of rental platforms. Their online presence, marketing tactics and screening mechanisms remove many of the landlord-tenant headaches that you might normally encounter. You can also list your home on more than one platform, increasing your rental stability.
Nonetheless, you should still take measures to protect yourself and your investment.
Finding the right property
If you’ve weighed the pros and cons of owning a holiday let, your next step is to find a property that will give you a good return on your investment. You’ll need to determine a budget – a real estate agent can help you crunch the numbers, but even if your funds are somewhat limited, you may still be able to buy a home. One option is to purchase a property that’s being sold as-is. While these properties have a lower price than other homes on the market, they often have issues you’ll need to take care of before you rent out the home. These problems can be as minor as mold or mildew in a few rooms or as major as a faulty roof, so if you go this route, you’ll need to plan on putting some money toward improvements.
Along with your budget, you should also consider these factors when choosing your prospective holiday let:
Location: Properties near hotspots like beaches and restaurants are most desirable to people on holiday.
Size: Homes with at least two bedrooms will accommodate solo travelers and families alike.
Features: Properties with pools, private parking, and formal outdoor spaces tend to lure in renters.
The best of both investing worlds
Investing in holiday lets you provide with the benefits of “real asset” investing, while providing you with some intrinsic benefits, such as owning a getaway place to use during gaps in rental activity, or simply at a time of your choosing when you don’t mind taking the place of a paying guest. That’s not a bad way to get your feet wet in the real estate investment world.
Are you looking for an award-winning holiday let property manager to care for your home? Call Allan Prince, owner of Palm Cove Accommodations, at 0435907197.
Photo by Unsplash