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Is Vacation Rental Accommodation A Good Investment?

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Written by Chris Luck

Thursday, 27 March 2008

by ChrisLuck

With most stocks and shares worth less than they were a few years ago, many people are putting their money in apartments and villas to let to holidaymakers. The hope is that rental income will finance the ongoing costs and will in time pay off the mortgage. Is this feasible?

To increase the rental income, buy your villa or apartment in an area of the world that attracts visitors most of the year rather than just in the summer months. By so doing the potential income should easily cover ongoing mortgage and maintenance costs. The next question to address is whether or not you should employ a managing agent or do most of the work yourself? Recent press articles about absentee owners in Spain suggest employing an agent is risky.

There are many examples of absentee villa owners not being paid for lettings that the agents 'forgot' to inform the owners about. Jane Moore, a solicitor in Marbella, has heard of many examples of owners being ripped off. "I've heard of rental agency staff using clients' properties for all sorts of things, including family holidays," she says. "If you don't live locally, it's hard to know what is going on in your property."

The Internet has many websites where you can advertise your self catering apartment or villa and most sites will forward bookings and enquiries direct to you. An availability calendar that you control will ensure that you receive only bookings for weeks that are free. It does require some input and time from you but managing the bookings for your holiday accommodation is not difficult and will save you the not inconsiderable fees charged by agents.

It will make your life easier, and your business more successful, if you can make yourself available to field enquiries and bookings without undue delay. A telephone answering machine and emails are acceptable, but make sure you respond to messages the same day. There is a lot of competition out there and if a potential customer does not back from you quickly, he will go elsewhere. Although it is a chore, keep your availability calendar up to date. By so doing you will reduce the time wasting enquiries from people interested in booking your villa for a week when it is already let.

Handling bookings isn't the only task in managing your property of course, the villa has to be cleaned between lettings. If you are not nearby you will need to employ someone to do this. Fortunately there are companies whose function is to do this for you, and many will also meet the incoming holidaymaker to hand over the keys.

However, it is sometimes just not possible to find the time to manage your self catering villa and you may have to employ an agent. There are good ones, so take the time to ask for references and speak to other owners to see if they receive a good and honest service. Go through the agent's agreement with a fine tooth comb and ensure there is no confusion about the service they will provide.

To prevent your villa being occupied without your knowledge consider paying the utility bills yourself, if possible with a monthly statement. If meter readings show electricity has been consumed then the property must have been occupied and you will be owed rent. Usually the knowledge that you are able to check on this will be a suitable deterrent.

If you treat your holiday villa like a business there is no reason why it should not be self-financing, and provide a foundation for a portfolio of holiday rental properties.

About the Author:

Buying a self catering holiday apartment can be profitable if you choose an area that attracts visitors all year. Save matey by handling bookings yourself and advertise your holiday accommodatiat at our website.

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