How To Make Money From Your Holiday Home



So why would you opt to buy your own holiday home rather than rent or stay in a catered establishment?

Pam Golding’s Ling Dobson said internationally the trend towards owning a leisure property is on the increase, although not necessarily purely for the seemingly obvious reason.

“Very often, the usage factor is secondary to the investment aspect and potential for holiday rental income. According to HomeAway, which provides a global on-line vacation rental marketplace, an astonishing 89% of newly-purchased holiday homes are being rented out within the first year.

“They say today, 23% of buyers intend renting out the property compared to only seven percent in 2004. This statistic shows that the growing popularity of vacation rentals is making a big impact on buyers’ investment intentions,” Dobson said.

Pam Golding said that  buyers of holiday homes see an opportunity to not only cover their expenses by renting out the property, they also perceive the longer term potential of capital growth of the property – all this while they enjoy several weeks’ or months’ usage during the year and have the option of a retirement home in the future.

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“Consider if you invest in your 40’s or earlier, then by the time you retire you will have a fully paid-for home in a prime location which you know and enjoy, and have probably built up a local network, including friends.

“A second home purchase could therefore form part of your retirement planning and depending where it is located, this additional income could provide the means of funding further education for the children, or if you prefer variety, saving towards family vacations in other destinations,” Dobson said.

“In addition, as we live in a world of connectivity where entrepreneurs can successfully run a business in downtown Johannesburg from their superb retreat here in Knysna or Plettenberg Bay, we are finding many go for the second house investment, try it out business-wise and relocate thereafter. They may then let out their house in the city, where rentals are always in demand,” Dobson said.

Pam Golding noted that buyers of vacation properties are also no longer limited by the distance the property is from their homes. For an increasing number of such buyers, the further away the better.

Related expenses

The property company said that if your holiday home investment is also your future retirement home, it is advisable to consider all related expenses you may encounter.

Then either let it out as a long-term rental at first or ensure that the rentals achieved cover levies and rates and taxes, as well as the finance obtained to make this investment.

“In the popular coastal resorts you will generally find that you can cover a fair percentage of your expenses by renting the property out as a vacation home for as little as 18 weeks a year, which means you have plenty of time to enjoy your home as planned with friends and family,” Dobson said.

“Bear in mind that the peak holiday season is the time when vacation rentals are in highest demand and as a result yield the most rewarding rental income. In the high season rates are often double those of mid and low season.”

From an investment perspective, Pam Golding said that a coastal property with a sea view tends to retain its value, while holiday renters look for proximity to a beach with the scenic ocean view a definite plus factor.

“A home in a secure complex or gated estate also has its advantages, as apart from security a homeowners association removes much of the maintenance hassle.

“Other features which holiday renters look for include free WiFi connectivity; clean, good quality furnishings; air-conditioning and heating – if required; a modern TV, and ample beds for children.”

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