Golden rules for vacation rental letting -Buying a second property as a holiday home and renting it out to holiday makers is a shrewd investment for many people. There are many pitfalls that stand in your way so a decision like this should never be taken lightly. Below you’ll find 8 golden rules to turning your disposable income into a sound invest for the future.
1.
Location is everything - Choosing a good location is essential but it doesn’t automatically mean looking at the most visited destination as many of the properties would tend to be overpriced and the area too competitive. Destinations like
Florida and Spain have, over the years have become highly competitive with thousands of holiday villas available for rent. Look for areas close enough to major cities for those wanting long holidays or weekend breaks that also offer facilities close to the home - restaurants, bars or shops, particularly since holidaymakers will be catering for themselves. Many letting agents recommend targeting the weekend break market, as demand for this segment as been rising steadily over the past 5 years.
2. The best properties to buy are with
two or three bedroom because most holiday homes are booked by small groups of young friends who share a property, or young families with children. Also avoid big properties - only 15 per cent of holiday lets require more than three bedrooms. If you decide to target couples, make sure that it’s in a prime location as size won’t be as important to this customer segment.
3. Fund your purchase through an
interest-only mortgage because the interest payments can be 100 per cent offset against tax. If you have a lump sum following the sale of your buy-to-let, pay off a chunk of your main home loan and rely on the largest possible interest-only mortgage for the holiday property.
4. No company can guarantee you 100% occupency for your holiday home. You can make a good start to your research by checking out the competition on
www.holiday-velvet.com and see what other similar properties are retailing at. Then look at exactly how how many bookings you need a year to break even which is crucial if you plan on making a profit on your investment. You’ll have costs such as management fees (15 to 30 per cent of the rental income), insurance, repairs and upkeep. Some of these costs can be set against tax and offset against non-property tax bills.
5.
Hire the right letting agent to advertise your property, find tenants, manage turnovers and arrange maintenance. These can be costly or if you choose to do this by yourself, choose the best rental company for your area and property. You could do no better than start at
www.holiday-velvet.com6.
Maintain the property and ensure that it’s up to date with the best appliances and technology. Satellite TV, dishwashers, DVDs and CD players are no longer luxuries. Due to strict fire regulations, you will also need to put extinguishers throughout the home and ensure that there is easy exit from the property incase of an emergency.
7. Insure your property and most agents will require you to have
public liability insurance.
8. If you’re not good at
book keeping, learn how to do it and keep it all in order. Keep your finances in order as much of the costs may be set against your income.
Care to
share your thoughts on the topic?Labels: florida, forum, holiday-rental, vacation-rental
