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Why Invest in a Holiday Home?

Do you dream of someday buying a second home? Perhaps you want to pay off your first home and invest in a second one? With rental income as passive earnings and vacation time with your family? At first glance, a combination of affordable homes seems like an interesting investment. Carefully consider whether buying a holiday home is truly a wise investment. In our opinion, here are the three biggest pros and cons to consider when buying a holiday home:


Advantages of Investing in a Holiday Home

Investing in a holiday home has many benefits. You can also stay in it yourself, which is a great way to raise money for the purchase of a second home and is usually more profitable than long-term rentals.


I can use the house myself

Many people dream of owning a holiday home so they can go on short vacations or weekends. All you need is a few hours' drive to your favorite holiday destination, so your house is available at the time you want. They know the best restaurants, charming cafes, and most beautiful spots in the area, and the kids have likely even made a few friends. Experience the best time of your life and create moments you will never forget in your own villa. A significant advantage of owning a holiday apartment is that you are always at home during the holidays.


Great opportunity to finance your second home

Buying and renting a holiday home is also a good way to finance a second home. Of course, you may want to use the property for personal vacations with family and friends at certain times of the year, but the key is that holiday property pays for itself or even generates a small profit to offset mortgage costs. Because the holiday home is rented to tourists for most of the year, the holiday home actually costs nothing. If your rental income exceeds your expenses, you can fully pay off your holiday home in 10, 20, or 30 years without it costing you a cent. Buying a holiday home in a good location can be a dream investment in the long run.


Holiday Home

Higher returns than traditional rentals

If you want to invest in a second home, it doesn't necessarily have to be a holiday home. You can also buy a small studio or a one-bedroom apartment in the city and rent it out for the long term. However, a significant advantage of renting a holiday home compared to traditional renting is that holiday homes generally yield higher returns than regular rentals in non-resort locations, especially during the peak season. Although every real estate market is different, holiday homes generally generate more income than long-term rentals. Higher income also means that your property purchase is paid off faster.


Disadvantages of Investing in a Holiday Home

However, there are some downsides to investing in a holiday home. Rental income is not easy to predict, municipalities want to limit rental income, and administrative burdens are higher than expected.


Fluctuating rental income

One of the advantages of long-term rentals is, of course, that you have a constant income. With a long-term contract, you can easily calculate when your investment will be paid off. However, when you want to rent out your second home as a holiday home, you must take into account fluctuations in rental income. During the peak season, rental income is very high, but during the low season, rental income drops.


Therefore, it is very important to have a solid plan and calculate your income on an annual basis. There are several factors that determine the income you can earn from renting out your holiday home. Location, size, number of bedrooms, distance to the beach or center, whether the property has a pool, etc. When you register your holiday home with Villa Management Spain, we guarantee that your rental income is optimized.


Local governments restrict the rental of holiday homes

Local governments are increasingly threatening to restrict the sale of holiday homes to prevent local residents from being priced out of the real estate market. Especially in Spain, it is increasingly forbidden to rent homes in city or historic centers for short periods or only a few weeks a year. If you are considering buying a second home with the intention of renting it out as a holiday home for most of the year, it is important to check with your local municipality. Even if there are currently no laws restricting the rental of holiday homes, this may change at any time in the future. Therefore, consider the worst-case scenario if you have to occupy the apartment yourself or rent the apartment for an extended period.


Not a passive investment

Renting out your house can be a great source of income, but it may not be worth it when you consider the costs and hassle associated with playing the role of landlord yourself. Renting out a holiday home requires a lot of management work, which costs money and time. It is easy to underestimate the enormous amount of work involved in running a holiday home. Believe me when I say that standards nowadays are very high. Buying a holiday home is not a passive investment, but not if you rely on an external service provider to do it all for you. With the right information and the right partner, buying a holiday home can actually be a great investment

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