A First Time Buyer's Guide to Holiday Homes

Whether you’re looking for a getaway from the daily grind or a source of rental income, a holiday home can be a great investment. But purchasing a property abroad is daunting for many first time holiday home owners. This guide will help you determine what to look for in a holiday home.

Your Holiday Home Goals

For most, owning a holiday home is a little bit of business mixed with pleasure: during the off-season it’s a source of rental income, but when you want to take a holiday it’s available as a cost-effective home away from home. However, before you spring for the remote mountain chalet that you’ve always dreamed of, stop and consider the primary purpose of your holiday home. After all, you might not mind a three-hour trek through snowy Alps, but if you’re planning to rent out your property for most of the year, you might want to consider purchasing a property that’s more tenant-friendly.

You need to ask: is my holiday home primarily for personal use or is it a financial investment?

If Your Holiday Home is for Personal Use

If you’re purchasing a property for your sake, don’t compromise on your preferences. For example, Sweden may not have the most buyer-friendly price-to-rent ratio, but if you’ve always dreamed of having a cottage in Sigtuna, don’t let that dissuade you. Your holiday home is probably a lifestyle choice if...

  • You plan to spend a lot of time in your holiday home, or occupy it during peak tourist seasons.

  • You prioritise personal preferences (e.g. remote location) over tenant-friendly features (e.g. ready transportation).

  • You choose location based on personal preference as opposed to economic stability and resale value.

If Your Holiday Home is an Investment

Holiday Home Silhouette

If you’re hoping to make a profit from your holiday home, you should prioritise locations with low average price-to-rent ratios and stable currencies. You should still find something to your tastes, but factor local attractions and conveniences into your decision if they will make your holiday home more appealing to tenants. If your holiday home is an investment, consider the following questions:

  • How long is the holiday season? Will you earn enough rental income to make up for a short window of balmy weather?

  • What are extra features worth? Will spending a little more on a property with more bedrooms or a sea view result in a dramatic increase in rental income?

  • What tourist attractions are nearby? What features can you advertise to appeal to prospective tenants—even if these features don’t necessarily appeal to you?

  • Does the property have a low buy-to-rent ratio? Will you easily be able to pay off your mortgage and cover additional costs with your rental income?

  • Is my property in a prime location? Will I struggle to find tenants during the off-seasons? Are there opportunities to rent out my property year-round?

  • Have you considered additional costs? Do you need to pay an agency fee to manage your home? What about gardeners, laundry services, and holiday home insurance?

  • What will my property’s resale value be in 10 or 20 years? If you plan to flip your property for a profit, do you expect its value to rise in the foreseeable future?

If Your Holiday Home is Half-Pleasure, Half-Business

If your holiday home is a mix of business and pleasure, try to find a comfortable middle ground between the points raised above. You should purchase a home in the location you want and the amenities you value, but be willing to compromise on details such as accessibility and which seasons you’ll occupy the home.

Planning Makes Perfect

Whether you’re purchasing primarily for personal use or as a financial investment, the key to getting the perfect property is to do your research and take your time. Make sure you can afford the home and then find a credible lender in the country you’re interested in. You need to trust the local property agent you work with, because you’ll be relying on them to maintain your holiday home while you’re away. If you’re looking for more advice on holiday home investments, such as where to buy, what to look for, and when to purchase, check out our five simple steps to successful holiday home buying.

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A First Time Buyer’s Guide to Holiday Homes

Here's some information on how you can purchase yourself a holiday home. We cover some of the important information about owning a second home in a dream destination to make sure you get that place in the sun!

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