Reasons to Invest in a Vacation Home

Bricks and mortar have always seemed like a solid investment, and many people worldwide are reaping the benefits of investing in a vacation home. Their reasons are varied, though the one thing they have in common is that they have decided to take their investments into their own hands, and manage them, rather than rely upon bank investments which may not always suit their future needs. A vacation home is a solid investment, though only if a lot of thought has gone into the planning of the purchase, and investment potential.


*Price of property.

*Potential of the property.

*State of repair of the property.

*Letting of the property.

*Property management.


If your budget allows you to buy a vacation home without hardship, then the investment is surer than if you have to borrow. The disadvantage of borrowing is often that the buyer does not take into account that they may depend upon the income made from the vacation property to pay off the loan. If indeed this is the case, the investment can be sound, though only if all of the following criteria are met. The budget should include legal fees and real estate costs.

Price of property.

Often in a vacation location, an investor sees a house and compares the price of that house with the area they are familiar with. This is an error of judgment. The way to look at it and to gain the best advantage is to look at comparable houses within that location, to see if the price compares well with other properties of similar style. Doing a like for like comparison often gives the investor the chance to haggle on price in order to obtain the best deal. The price structure for vacation homes may be based on what a seller wants, rather than on the reality of what they can expect to get. Comparison allows a speculative purchaser to be aware of the competition around them, and to look for those houses which offer the most opportunity for the best price.

Potential of the property.

What is the real rental potential? Often real estate agents will promise the earth, though what they promise at the time of viewing a property may not be the reality. Look and see what similar properties are rented for within the area, and compare like for like. Another thing to look out for is whether there is a glut of properties being offered in the same area. Often investors do not realise that perhaps they are buying in a stagnant market. The advantages of knowing the true situation help the investor to establish how many weeks per year the property can be rented, and what the potential of that rental is. If also taking into account all overheads and advertising, the investor can make a killing by working out the maths, and the viable potential of the property as a solid investment.

State of repair of the property.

Although investors may look through rose tinted spectacles at the thought of owning a holiday property, the state of repair of the property acts in two ways. One is that it will cost money to refurbish the property which should be taken account of in the budget. The other is that letting agencies you employ may only take properties which offer set standards, and the potential investment house may not reach these standards even after refurbishment. The savvy investor will have approached letting companies to find out what the criteria is for taking on homes from private individuals and be aware that the state of repair of the property will add potential value to their investment.

Letting of the property.

If an individual can rent a property privately, then they can make a lot of money, though often holiday homes are far away from where they live. Finding out all the information about whether permission is needed to let a property within that region is vital. It is also vital to know about what costs are involved in letting, by way of taxes, as this is unearned income and will be declarable. Savvy investors can use the costs of agencies to right off against profits and still make good money, if they do their homework.

Property management.

If taking on a property management company, this can take away a lot of headaches. You will need someone to clean the house between lets, and also to establish the booking and management of the house. If it is the investor’s intention to use the services of a management company, they must find out what provision can be made so that the property is free for them to enjoy during their chosen holiday stay. This will detract from the profit made, and many property management companies restrict owner occupation during peak periods. The advantage to the investor who discusses all these issues in advance is that they are more aware of restrictions, and also can depend upon the expertise of property management companies to do the necessary advertising on a large scale. It should always be established what the costs of these companies are, as some are more favorable than others, though it is vital to measure services by the whole package they offer. The investor can make a killing if choosing a property management agency who have a great reputation and client base who fill the property for as many weeks as possible, whereas the cheaper management company may have less clients and thus less chance of keeping the house let.

The reasons why people invest is to make money, and more and more people are finding that the market is open to investment opportunities which can be extremely fruitful. What the area offers the guest is important, and whether the location is popular has a bearing on how well the investment fares. With the right amount of reasoning behind the purchase, investment and running of a vacation home, there is still money to be made, and an opportunity to invest in property which can increase in price. Many investors are speculative though those who look at the growth of the tourist industry within a certain geographical area and those whose reasons are the most solid. In a growing tourist area, prices will rise, and the value be secure. That’s why the popularity of vacation home purchases is increasing and more and more people benefiting from the possibilities offered.