There are many reasons why you should invest in a holiday home. Not only is it fun to give guests a wonderful holiday, but the profit prospects and tax advantages also speak in favour of investing in a holiday home.
Holiday home as an investment: is it worth it?
Holiday rentals have long been recognised as a good investment. With the right holiday home, you can expect higher returns and have very little work involved with an agency. If you choose, furnish and present your holiday home well, you will very quickly generate income that you can use to pay back your loan. But income is not the only reason to invest in a holiday home. You can also deduct depreciation and other costs incurred for the holiday home from your taxes. In many cases, you do not have to register a business as long as your rental income does not exceed a certain value.
Find a suitable holiday flat to buy
Find a suitable holiday flat to buyTo make an investment in a holiday flat worthwhile, you should pay particular attention to the location of the property in question. Put yourself in the shoes of your potential holiday guests. What could make your holiday home so special? Make a list of pros and cons to decide whether the location could be the right one. For example, overpriced tourist strongholds may not be particularly lucrative for your investment due to rising prices and high competition.
What costs can be incurred when buying a holiday home?
Before buying a holiday home, you should find out about the costs involved. Below we have compiled a few cost items for you that you should expect if you want to get into the holiday rental business.
1. Acquisition costs when buying a holiday home
If you do not already own a holiday home that you would like to rent out to holiday owners, you should determine how you will finance it before you buy it. The following costs will be incurred in addition to the purchase price:
- Financing costs
- Real estate transfer tax
- Notary and court costs
- estate agent fees
2. Operating costs of a holiday flat
In addition to the purchase costs, there are also costs for running the holiday home. These usually include the following:
- Operating costs
- Repair costs
- Cleaning costs
- Maintenance & servicing
- Running costs (telephone, internet)
- taxes
- Insurance costs
- Broadcasting licence fee
- GEMA fees
3. Marketing and administrative costs:
In order to generate income, your holiday home should be made known to holidaymakers, for which well-positioned marketing is essential. The following costs may be incurred:
- Costs for your own homepage
- Marketing costs for various adverts
- Commission fees for bookings via online portals
If your holiday home is marketed externally by a landlord portal, your holiday home will be made available and managed on all relevant portals.
Managing a rental property is time-consuming
If you decide to invest in a holiday home as a capital investment, you should be aware that you will also have to invest a lot of time. In addition to the costs incurred for purchasing the holiday home, furnishing it and other running costs such as repairs, you will also need to market it. It is therefore always advisable to calculate the costs and revenue before buying a holiday home. You will soon realise that the marketing and administration costs in particular are high and that marketing and administration is time-consuming. Atraveo takes care of the marketing for you and conscientiously places your holiday home with guests. You only pay for incoming bookings, so you only have expenses if you generate revenue. You also have specialists at your side at all times to whom you can address any questions about holiday home ownership.
Rental price for your holiday home
Financing your holiday home through rental income is only possible if you calculate the right accommodation price. Pay attention to the market, the competition, the seasonality and also think about your own costs and the possible vacancy rate in the low season, which you have to compensate for. Observe your competition and adjust the rental price to the facilities of your holiday home. An upscale and well-equipped holiday home in a good location will certainly fetch higher rental prices than a holiday home with poorer options. Get clever tips on furnishing a holiday flat here.
Let a holiday flat: Private or commercial?
If you have decided to rent out a property as a holiday home, there are legal aspects to consider in addition to the basic questions already mentioned. The distinction between the private and commercial letting of a holiday home alone can seem tricky at first glance.
Conclusion: Is it worth investing in a holiday home?
If you consider all the pros and cons of investing in a holiday home, you can decide whether it is a good investment opportunity for you. This is an individual decision that you should make after a detailed cost calculation and a risk analysis. If both analyses are positive, it may well be worthwhile for you to invest in a holiday home and give your holiday guests a good time.
