It’s quite typical for holiday homes to be located on the coast, especially where popular tourist destinations are. By many waterways, coastlines, and rivers you will find apartments or homes that have been switched out to Airbnbs, or they are private holiday homes ready for people who are traveling the world. It seems to be the ambition of many people to own at least one vacation home outside of their regular house, and everyone has special places that they would like to visit and unwind.
For some, buying a home in those places is a logical step in their investment property portfolio. Investing in real estate is not always straightforward, and from a financial perspective vacation home is something you can let out to others for them to enjoy as well. Buying and renting out property in popular tourist destinations can make some financial sense, but of course, as with anything, there are pros and cons. Let’s take a look at those below.
- Access. One of the biggest advantages of owning a vacation home is that you can go there whenever you like. You are paying for it, you’re paying for the rates of the land that it’s on, and you are paying the bills. If you want to take a weekend away or a few weeks a year to go to your holiday home, it’s right there and available for you to do that whenever you want.
- Access for others. Not only would you be able to travel there, but you can also allow your close family and friends to use your holiday home as a place where everybody can come together in an environment that’s fun, cheap, and safe. If you have an annual family vacation spot that you’ll love to go to, you could always have a couple of family members invest in properties close together, and then when it comes to travel, you could all head there at the same time whenever you want to go.
- Portfolio expansion. If you use the property a lot, you could turn it into your second home, but you could also expand your portfolio and use it as somewhere to rent out to tenants when you’re not using it. Short term rentals are very popular, and your property can be a part of that.
- Costs. Holding and marketing costs can be pretty high on a second home. The insurance that you pay on it can be different, and there may be a fee for the fact it’s a holiday rental when you’re not using it.
- Seasonality. If you want your rent to be high on this for your tenants, because of the fact that it’s a short term accommodation option, you have to consider the seasonal factors and the competition in the area. If your second home is right by the ocean, for example, you will be in competition with everybody else.
- The damage risk. When you rent out your home as a short term option, you have to be very specific about the kind of people you want to be renting it out to. This is important because the last thing you want is to get there for your own vacation and find it trashed.
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