Buying a property to rent abroad is an increasingly popular investment. But in order for it to succeed and not tun into a nightmare, there are many things to take into consideration. Find out how to enjoy and profit from your holiday home abroad.
With the change in mortgage regulations many people these days are buying properties to let and many too are considering a buy-to-let abroad venture.
There are certain advantages to buying a property to rent out abroad as opposed to your home market. Firstly, if you are aiming primarily at the holiday market, then the rentals are likely to be a lot higher; secondly, you can save a lot of money on your own holidays by using it when it is not rented out. In addition, it is much more enjoyable to own a home in the sun than a student let in Leeds! However in order to make your investment as viable and trouble free as possible, there are various things you need to consider before committing yourself to your buy-to-let abroad venture.
1. Consider your overheads, community fees, mortgage, maintenance etc. Do you wish to just cover these costs and thereby enjoy owning the property and having free holidays? Or do you actually want to make extra money as well?
2. How often and when do you plan to use the property? Don’t forget to take into account that you may have to forsake the peak periods for holiday makers as obviously you can charge more money then.
3. When looking at buy-to-let properties abroad, take into consideration the locality and facilities on offer in the area. If you are buying on the coast, then somewhere on the beach side, or at least within an easy walk of the nearest beach, is imperative. If you are buying a villa in the country then it is important that it has a pool. Nobody wants to spend holiday in the heat of the summer in Spain, for instance, without an easy access to water! Golf courses are also a consideration and if you can find somewhere close to a golf course as well as the beach, then you can substantially broaden your market.
Other facilities such as shops, bars, restaurants and attractions all need to be looked into. It is a competitive market and the more you can offer, the more chance you will be able to attract great guests.
4. Children and pets, yes or no? You are really reducing your market by excluding children but some people wish to do this in order to keep their holiday home in tiptop condition for their own use. Likewise, if you are prepared to accept pets then you have a wider market but of course you have to consider the cost of any possible damage. A refundable deposit against such damage is a good idea here – we will look at the pros and cons of this shortly.
5. Who will look after your holiday home abroad? Assuming you are not living locally then you will need to find a reliable person or persons to clean and maintain your holiday home. You need someone to do the laundry, the change over, meet guests and generally be on call should any problems arise.
The success or failure of your buy-to-let abroad venture can literally depend on this person/s so it is essential to invest a little time to find, and pay a little extra for a responsible, reliable person. A personal recommendation is probably the best way to solve this problem or you could consider a property management company – their charges will be higher but they should at least be able to resolve all problems on your behalf.
6. How much will you charge? This is a very important question to consider as obviously you don’t want to run at a loss, but on the other hand you do not want to price yourself out of the holiday rental market, and it is a very competitive market. So you need to exercise a certain amount of common sense when pitching the price of your holiday home. One good way to do this is to do some research on the internet and see what other people are charging for similar holiday properties in similar areas, and then try and undercut them a bit.
Keep your pricing structure simple. It usually works the best if you just have three seasons, October till April; May, June and Sept; July and August.
Christmas and Easter are then included in the mid-season rate. Make the price all-inclusive with no hidden extras or complications as they will frighten people off.
7. Refundable deposit. This is a difficult question, particularly if you are not living in the area. A deposit of around 100 pounds, depending on the standard of the accommodation, against breakages will give you a certain amount of peace of mind and may make your guests more conscientious but you do need to take into consideration who is going to collect it and then check the villa or apartment over at the end of the holiday and refund it. Obviously, if you have to pay someone to do this then it may not be worth your while. In general, the amount that people have paid to stay in your holiday property is more than what can make up for the odd broken glass etc. Alternatively, it may just be easier to take out a good insurance policy against any other sort of damage.
8. Finding the customers. This is obviously a major consideration for any buy-to-let abroad venture and you need to give careful consideration as to how you are going to promote you holiday home and find guests for it before you take on a buy-to-let property abroad. There are various options and you may well find that the most productive way is to adopt a combination of them.
Advertising online and especially the rising of holiday rental platforms for your holiday home is an obvious option nowadays. But even here you have two distinct options.
Firstly you could build your own website.
This is good fun and perhaps gives you more scope than registering on an existing holiday rentals site, but it can be difficult to be listed on the top spots at the search engines if you are new to digital marketing and SEO (Search Engine Optimisation).
The other online marketing option for your buy-to-let abroad property is to pay to list it on one of the growing number of holiday rental websites such as Airbnb. These will charge you anything from 15-20% commission for each booking. With some you upload the listing yourself with others you send the information and photos and they will do it for you. All enquiries then come directly to you and you have to handle all the administration yourself.
You could also use a booking agency who will promote your holiday property, arrange the lets, handle all bookings and send directions etc. For this they will charge a commission of around 15-20% but it does mean you have little to do yourself apart from cash your cheques! There are also property management companies that will take on the whole business for you but their fees tend to be fairly high and they they may require a minimum number of weeks to be available for rent which may not fit in with your own plans.