Tuesday, July 11, 2017

Vacation Homes - A Great Investment?

One sort of investment that the wealthy and entrepreneurs have made popular in recent years is the vacation home. This is a property bought to be let out during peak times in an area that is popular for holidays and breaks. But are they actually a good investment? Read on to find out.

Yes - Holiday rates are higher than day rates

One reason that investing in vacation real estate can be profitable is that the rates you can charge for them are much higher than a normal rental property price. This is because they are in premium location.

To qualify as such the location should be in a popular vacation spot either by the beach, in the mountains, or the forest. It should also be close to amenities such as shops, and entertainments, and most of all it should be either set on its own property or with other buildings of a similar quality and price.

In fact, with a property that matches the description above, you can make enough to pay off the mortgage for the entire year just by renting it out during peak season. Although peak seasons will differ from place to place. As ski homes’ peak will be in winter, while other holidays homes’ will be in summer when it's hotter as their most popular time.

No - They have to be competitively priced

However, something that can eat into your profits is if you are in an area that is all holiday rentals. This is because the prices that are being charged can become too competitive with different owners trying to undercut one another.

If this happens, it may mean that you have to lower your prices to ensure you get bookings. Unless you have some unique features such as a hot tub, balcony or swimming pool that will allow you to charge over and above what the average vacationer would expect to pay.

Yes - You have a second home to use

Other reasons that vacation homes make such great investments is that they remain empty and unused outside of peak times. This is great because it allows you and your family or friends to use the property as a second home. Without interfering with its profit-making potential.

Then, of course, you also have the money that the property is worth if you decide to sell it. As well as the money you have earned by renting it out.

No - There are other costs

Lastly, another reason why vacation homes may not be the investment you'd thought they be is that there are quite a few hidden cost to running them.

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