The cons of buying a holiday home
Before you make any snap decisions, you need to consider some of the drawbacks of buying a holiday home. These can include:
Volatile property values
While holiday homes can increase in value, they are also more susceptible to market downturns. That’s because they are an expendable asset and reflect discretionary spending. So, when times are good, prices typically rise. However, when belts need tightening, they are often one of the first assets people want to offload.
Rental returns can fluctuate widely
The holiday rental market is predominately seasonal, with many properties only seeing strong demand for, on average, a few months a year. Finding a tenant to cover the down periods can be challenging – and it’s your pocket that takes the hit when the property is lying vacant.
The holding costs of owning a holiday home soon add up, especially if you’re renting it out to holidaymakers. There are property management fees and cleaning costs to consider, as well as repair bills, council rates, public liability insurance, short stay insurance and advertising. While your rental income may cover some or all of these expenses, these ongoing expenses can take a large bite out of the profit.
No variety in your holiday destination
You might love the area. But do you really want to visit the same place every time you holiday? And while there’s no rule you mustn’t travel elsewhere, you may feel obliged to considering your investment.
Not being able to access the property when you want
Unfortunately, the times you’ll probably want to holiday in the property will likely coincide with strong rental demand. So you may have to do without a much-needed break or only visit in less popular times.