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Buying a Holiday Home as an Investment

Like buy-to-let properties, holiday homes work as investments and part of a general investment portfolio. They make a very different investment type, however, compared to say stocks and shares, and may not be for everyone. If you’re thinking about buying a holiday home as an investment you need to consider several important factors.

Best use for an Investment Property

Buying a property for pure investment purposes obviously means you have to find a purpose for it. You need a way of generating income from the property beyond the basic capital appreciation made from simply owning the property.

The commonest options include long-term rentals and becoming a buy-to-let landlord; holiday lettings, a popular and more hands-on way of making money from a property; and running a bed and breakfast (B&B). Each of the three comes with its own pros and cons. Take a look at our list and see which one appeals most to you.

The ins and outs of buy-to-let investments

Prior to the latest tax regulations, would-be landlords couldn’t get enough of buy-to-let properties. However, the recent changes in tax relief plus hefty stamp duty on second home purchases has dampened enthusiasm a little. That said, letting property to long-term tenants does have some advantages over short-term or holiday lets:

But along with the swings, come the roundabouts:

The ups and downs of holiday home investments

Letting your investment property for holidays or short-term rentals (i.e. up to 31 days at a time) is another way of generating income. Benefits of holiday lets over long-term rentals include:

But holiday lets can lose a bit of the edge over buy-to-let properties because:

Top tip – make your holiday let as hands-off as you like by employing the services of a property management company to take care of the latest rules and regulations, emergencies, key-handovers, cleaning, etc.

Best type of property for holiday home investment

Holiday homes come in all shapes and sizes from caravan to cottage and park home to palace. Whichever you opt for will depend on the following factors:

Price – arguably the first consideration for any holiday home investment and a major advantage for park homes – you can pick one up for around £15,000. Ultimately, the property has to be affordable for you while also ticking a series of other boxes…

Location – yes, the same old but just as important. When choosing your spot, remember you’re buying so that someone else can spend their holiday there, not you. Go for the views to die for – sea, mountain or lake typically appeal most.

Accessibility – the property needs to be easy to get to, preferably provide parking, or a permit for doing so in popular or restricted areas and at least communicate the steep footpath leading to the front door if that is one of the property’s quirks.

Property type – the quirkier the history or architecture of a holiday home, the more popular it typically is – glamping in Cornwall is particularly popular and can take the form of shepherds huts or yurts. However, well appointed, up-to-date and tastefully furnished homes that have considered the above-mentioned points will have a broad appeal for visitors throughout the year.

Final Thoughts

As with all investments, buying a holiday home comes down to weighing up the pros and cons to work out what’s right for you. On balance, there’s plenty going for holiday home investment if you choose the type of property and location with care. A property in Cornwall, for example, ticks the boxes both for long-term return and a steady revenue stream.
Ultimately, buying a holiday home as part of a varied portfolio of investments can give you excellent exposure to the market without having all your eggs, so to speak, in one basket.

This blog was provided by Cornish Traditional Cottages