RO(HH)I: Maximizing Return On Holiday Home Investment

Imagine being able to book flights and not worry about accommodation. Wouldn’t it be amazing? Well, it is for the people who decide to invest in a holiday home. Don’t get it twisted because there is a lot more to it than a novelty. Yes, being a foreign homeowner is cool but it’s also a potential money-spinner. After all, properties in foreign lands are sometimes cheaper and offer a better ROI. A vacation home which churns out money, too; it’s a no-brainer.

Like all investments, there is a lot of hard work to do before you can pat yourself on the back. Here are the things to consider, then.

Location, Location, Location

Finding a place where people want to rent for a week or two is the key. Whether the property is cheap or not doesn’t matter if no one will stay. It’s just a smaller amount of debt. Of course, the popular destinations are the ones which charge the most money, and that increases the costs. So, what are the options? The main one is to research an up and coming location. For example, Britain and Australia are as costly as the USA. However, Thailand, India and Mexico all have cheaper rates. You can still charge a decent amount in rent, though.

The Flip Out

One way to turn a profit is to invest and flip the property. Then, the earnings go into the next venture until there is a lot of money in the kitty. For short-term investments, this is a clever idea which can work. Longer-term projects need space to breathe before they begin to make money. So, if you have a mortgage on the property or a loan, you may fall into the latter category. The same goes for the investors who don’t live nearby. Paying for a management company to deal with clients is another expense which you’ll need to factor in beforehand.

Backup Plan

Nothing is guaranteed in life. With that in mind, please don’t shirk your insurance commitments. What that means is buying condo insurance or whatever policy is necessary and keeping up with the payments. Yes, money may never come back if there isn’t an incident. But, that’s a good thing because it means the investment has been a smooth one. And, it’s wise to have a policy in case there is an unforeseen circumstance. Guests may not pay or damage the property and the deposit doesn’t cover the costs. The insurance company should limit your losses.

Marketing The Market

You want to make money, which means attracting guests. However, they aren’t going to trip over themselves to make a booking if they are unaware of the opportunity. A handful of people may stay but it won’t be enough to maximize your earnings, which is why marketing is essential. The best holiday homes have a reputation, and yours can too with the right tactics. The basics include a website and SEO, but word of mouth works also.

A vacation home covers all the bases, but can you?


Arnel Ariate is the webmaster of Money Soldiers.

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