Posted on: Wednesday, May 22, 2024
Having a magical home hidden away from the hustle and bustle of your everyday life is a great asset to own. Not only will you benefit from being able to relax and having a place to get away from it all, but it can also be a good way to let your property earn its keep. Looking to invest in a holiday home? Here are our top tips...
Lists are a handy way to help you decide what you want and will help you figure out what to prioritise in your second home. You may want to have the best of both worlds and be able to enjoy your investment while it’s not booked out to holidaymakers. When you are organised and know what you want, it’s much easier to find what you are looking for. If your budget is a challenge, consider regions that you may not have previously thought about.
Waking up to sea views and the sound of the ocean in a cottage on the coast might be a dream of yours, or perhaps you'd prefer a home surrounded by lush greenery and vast landscapes. Regardless of your desired location, it’s worth keeping an open mind. If you are planning on frequently using this as a second home for you and your loved ones to enjoy, you'll want to consider travelling times. You may decide to choose something closer to home out of convenience, and if you are renting it out as a holiday let, and plan on managing the property yourself, this may become essential.
Holiday lets can achieve a higher rental income than a buy-to-let property. This could help you achieve a good return on investment. It may be worth calculating potential returns by using an online rental yield calculator to help you gauge your potential profits. It’s worth remembering that holiday lets will require more levels of upkeep, and this will increase costs. But if you get the numbers right, are careful not to overspend on improvements, and manage to fill your diary with bookings, your holiday let may cover the cost of its mortgage, with a profit.
If you have a good level of equity in your current home, and are borrowing to buy, then finding the deposit could be relatively straightforward by putting some of that equity towards a holiday home. Although, typically, you will need a bigger deposit just as you would with a buy-to-let mortgage, this usually stands at 25% or 30%, depending on your mortgage provider. As you pay off your mortgage and build up equity again, you may decide to repeat the process, and make a business of it by starting a holiday let property portfolio. If you do this, forming a limited company may offer advantages.
If you love the idea of investing in a holiday home and want to make the most of it as a source of income and a place to escape and unwind, but it all sounds like too much hard work, consider using a holiday let managed service. If you do, they could take care of marketing your property, so it gets plenty of bookings, linen hire, and your property’s maintenance. This is another expenditure that may be worth the money, as it could help ensure your property is earning its keep.
Are you thinking of investing in a holiday home that you can escape to? Contact your local Guild Member today.
We are required by law to conduct anti-money laundering checks on all those selling or buying a property. Whilst we retain responsibility for ensuring checks and any ongoing monitoring are carried out correctly, the initial checks are carried out on our behalf by Lifetime Legal who will contact you once you have agreed to instruct us in your sale or had an offer accepted on a property you wish to buy. The cost of these checks is £60 (incl. VAT), which covers the cost of obtaining relevant data and any manual checks and monitoring which might be required. This fee will need to be paid by you in advance of us publishing your property (in the case of a vendor) or issuing a memorandum of sale (in the case of a buyer), directly to Lifetime Legal, and is non-refundable. We will receive some of the fee taken by Lifetime Legal to compensate for its role in the provision of these checks.