We have all been there, on the last night of a holiday with the impending monotony of our everyday lives looming ahead of us. Let’s be honest, how many of us have wondered, what if we didn’t have to go back?
What if the vast vineyards of Tuscany or the sprawling beaches of St Tropez, in fact, became our home? Some of us may be contemplating on buying a holiday home bolt-hole and it is clear to see the attraction to all for doing so, with the potential of yielding rental income and free lifelong holidays. Buying a holiday home can be a fabulous and fruitful option, however only if this fits in with your long-term plans and inevitably your financial disposition.
Let us summarise some of the positive and negatives to buying the holiday home of your dreams:
- Primarily, owning your property inevitably means fee free holidays for yourself, friends, and family. You will be able to stay for the desired amount of time, whenever you want. Furthermore, you can avoid those costly peak fees for holidaying during the school holidays and work shutdowns.
- If you are interested in the surrounding area, owning a property will enable you to immerse yourself into local life, people, language, and the culture, enabling you to make life-long connections.
- Putting your property for rent when you are not using it could provide a lucrative rental return which may outweigh maintenance, loans, and council fees. With property prices booming in most of Europe, you are likely to see your property accrue value over the years which serves as a fantastic investment opportunity.
- In the long run, a second home also bears a potential retirement option offering you a home from home in warmer and sunnier climes.
- Don’t forget to consider tax savings, there are several tax advantages for second home owners and these vary from country to country so be sure to shop around before making your choice.
On the flip side:
- Holding fees can be an immense financial weight, especially if you can’t find a tenant to rent your property and finding a tenant outside of popular holiday times can be tough. Ultimately the times you may wish to use your property may be the same time everyone else wants to visit which means you may have to choose between holidaying when you wish and securing rental revenue during peak times.
- Alternatively, your vision of the dream escape destination may not be in line with other holidaymakers, meaning it could be difficult to rent and you risk having the property sitting empty for long periods of time. Do your research on holiday trends and visitor numbers that come to your potential area every year.
- There would also be additional outgoing fees when renting out your property, for example supplying fresh linen, and cleaning during changeover days. You’ll also have to arrange basic ground keeping to keep the property at a marketable level. Potential damage could go unnoticed for an extensive period such as leaky rooves or broken fences and these issues can prove to be costly to remedy, as well as making the property uninhabitable for the duration of the work.
- As with any investment, there is the that the property may not accrue in value sufficiently to outweigh the costs or for you to see a high return. You also run the risk of the property increasing in value after purchase, but then decreasing if and when you decide to sell. Remember, property markets can be unpredictable and although the global property market is on the up, you never know what is around the corner.
It could be that in some cases, it is just better to rent. However, it is important to weigh up the pros and cons and apply these points to your individual situation. We would also advise that it is always worth seeking the advice of the professionals. Real estate agents suggest some crucial tips such as;
- make sure you do extensive homework on your potential property and local area;
- do not be tempted to buy during the peak of the season;
- do the maths- add up all realistic costs that you may encounter (everything from cleaning, utilities to checking no four legged creatures have moved in during your absence);
- Sit down and weigh up the long-term benefits for you personally to frequent the same location versus holidaying in different destinations. You might also want to consider selling a second property that you already own (perhaps an investment property) to get some cash flow for your new holiday home. For more tips on how successfully market your property click here
Ultimately be realistic at each stage of your plan and we wish you all the best in making the first steps towards your second home!