Welcome back readers! As you can see, I’m back on blogging form, and today I’ve got some tip-top knowledge coming your way. If you’ve found yourself on my website, then you’re probably as obsessed with property as I am. You know that there’s lots of money to be found in this huge industry, and you love hunting it out. Seeing as the weather is starting to get a little bit better people have started thinking about holidays. I was chatting to a friend the other day who is looking at purchasing a holiday home but she is unsure as to the year long benefits of doing so. I started doing some research which given me a wonderful insight into the potential profit margins on the right holiday apartment.
I love the idea of renting a property, because it creates a guaranteed income. Alongside your steady day-job, it’s an extra cushion of money that you can put away for retirement. Or, you can be frivolous and treat yourself with the extra cash. Either way, it’s a fantastic way to increase your earnings. In this post, I’m going to show you how to make a profit from your holiday home. It’s a little different from your typical rental property, so pay attention!
Get the best mortgage rate
There’s one thing people don’t always realise about renting properties. Your profit only comes when you balance the figures very, very carefully. Most people think that renting is an easy goldmine. It’s not! By getting the numbers wrong, you can end up spending more than you make in rental income. So, your first step is finding the very best mortgage rate. My pro tip here is to get at least two letting agents to estimate the rental income. Take an average, then make sure it’s at least a third higher than your mortgage payment. That’s how you guarantee a profit.
Choose the right location
We’ve all heard the phrase ‘location, location, location’ when it comes to property. We all know how important the location is. Well, when it comes to rental properties, we couldn't be clearer. Location is the most important factor in your profit margin. You need to know that tourists will flood to the area. You need a guaranteed rental income, and you need assurance that you can charge the right price. Only do this when you know the location is perfect. If you get it wrong, you might want to sell it fast!
Keep your costs down
As I said at the beginning of this blog, profit margin is everything when it comes to holiday apartments. Every decision you make is about squeezing the extra pennies out at the end of the month. So, that means keeping your costs as low as possible. The lower the costs, the more profit you make. Remember, holiday lets are different to regular lets. As the landlord, you’ll have to pay for energy bills and utilities. Of course, you can charge more per week, but be sure to factor in the additional costs.
Keep it busy all year round
Finally, make a plan to keep your holiday rental busy all year round. Many people work out their costs based on a twelve month let cycle. Only later do they find out that tourist seasons leaves four-five months without lets! Either choose a location with twelve month interest or find a way to entice people all year round.
Renting out a holiday apartment is a fantastic way to make money. But, only if you do it correctly!