Are Vacation Rentals A Viable Investment?
Rising property values worldwide have encouraged many people to invest in holiday apartments and villas in the hope that the rental income will cover the buy and maintenance costs resulting in a mortgage-free property that’ll provide a good income during retirement. Is this just a dream, or is it a sound business plan?
Properly managed property in a popular area, especially if it attracts bookings throughout the year, should be self-financing. However, ‘properly managed’ does not necessarily mean that you should trust a rentals bureau to handle bookings and generally manage your holiday accommodation. Indeed, the current experience of many villa owners in Spain recommends that you should be very wary of using an bureau and you would be better advised to handle everything yourself.
There are lots of examples of absentee villa owners not being paid for lettings that the agents ‘forgot’ to inform the owners about. Jane Moore, a solicitor in Marbella, has heard of many examples of owners being ripped off. “I’ve heard of rental bureau staff using clients’ properties for all sorts of things, including family holidays,” she states. “If you don’t live locally, it’s hard to know what is going on in your property.”
There’s a way around the problem. The internet offers many sites where you can advertise your apartment or villa and most provide an availability calendar and a booking form. By advertising on-line you can take control of bookings and handle your business yourself, saving the 20% of rental income charged by most rental agencies along the way. All it takes is a tiny time and effort.
The secret of success is to make yourself available at all times. If someone wishes to discuss a booking they’ve to be able to contact you either by telephone or email, and you need to respond with tiny delay. Keep a potential customer waiting too long and he’ll take his business elsewhere. It will also save you time if you keep your availability calendar updated. If a customer contacts you wishing to book dates that the calendar shows are available but that are already booked, your time is wasted and, more importantly, the customer is annoyed and probably less likely to accept alternative dates.
Of course the property has to be cleaned between lettings and, if you live hundreds of miles away, you cannot do this. However, there are enterprising folk who have set up businesses to clean villas and to be available to hand over keys to incoming holidaymakers.
Despite the drawbacks, some villa owners will not be able to spare the time to manage their business and will be forced to use an bureau. The challenge then is to find a good one. Ask for suggestions from other clients and make sure you check them. Scrutinize the rental agreement carefully to ensure it is clear what the agents are required to do.
To prevent your villa being occupied without your knowledge consider paying the utility bills yourself, if possible with a monthly statement. If meter readings show electricity has been consumed then the property must have been occupied and you will be owed rent. Usually the knowledge that you are able to check on this will be a suitable deterrent.
If you treat your holiday villa like a business there’s no reason why it should not be self-financing, and provide a foundation for a portfolio of holiday rental properties.
Buying property as a form of investment has long been a popular way of ensuring a good return. Although market prices fluctuate, and there may be times when prices slump, over a long period all property rises in value, and...
Purchase To Let Investment In Northern CyprusMost people who are not in the property market don't understand what the term "Buy to Let" means. Well it's simple you buy the property and everything has been completed you rent to it out to anyone who wants to...
Make it Permanent – Buying Vacation Real Estate in SpainAre you a golfer looking for your next golf destination? Do you like to combine your ?need for green? with trips to culturally rich countries and cities? You should look no further than the beautiful country of Spain. Not only...
Top Tips On What You Should Know Before Buying Property In CyprusIt seems to be quite a common thing to buy a second property nowadays. But if you are considering buying a plot of land or property in Cyprus, it will more than likely be the best investment you will have...
Spanish Real Estate – Finding and Purchasing a Vacation HomeAre you in the market for a vacation property? There has been a recent surge in holiday homes in Spain and for good reason. Property prices are less expensive than many other countries and the climate makes it ideal for...