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3 Things to Consider Before Buying Holiday Rental Property

  • 2017-01-17

Buying holiday rental property can be an excellent investment, especially in popular travel areas such as Cape Town. Unlike long term rentals, short term rentals have a number of unique advantages, challenges and considerations that apply. From understanding the often changing demands of core travel markets to investing in property management, there is a lot to learn. The good news is that this type of investment has some very lucrative returns… assuming you are smart with your investment.

3 Things to Consider Before Buying Holiday Rental Property

What are the most important things to consider when buying holiday rental property? We’ve narrowed it down to three essential aspects of short term rentals.

Buying Holiday Rental Property? Here’s What You Need to Keep in Mind.

Forget about those happy, smiling couples on Airbnb who rented out their garden shack and ended up raking in enough profits to send their child to college. While you can succeed in this business, it is not always as easy or as glamorous as it seems. If you are serious about making it in the often competitive holiday rentals game, you need to start thinking well before you purchase property with the intent to rent it out on a short term basis. There are many, many things to consider. So many in fact, that it is hard to condense them all into a single list. On the Totalstay blog, we cover a wide range of tips and guides relating to short term property management and rentals – have a read through our recent posts to get started.

For now though, we will be focusing on the three most important things to remember when buying holiday rental property: area, market and management.

1/ Area

What is the most important thing to consider when buying property? To quote an old real estate slogan, “location, location, location”. This is one of the most important factors where all property is concerned, but for short term rentals, it is especially important. You could fork out a small fortune on a luxury villa in an area that is somewhat off the beaten path, and end up either losing out on potential profits or find yourself with an empty villa on a regular basis. In Cape Town, international and national travellers alike know all too well where they want to stay. The most popular areas are almost always the areas that are booked out the most, all-year around. Popular areas also have a higher income threshold (at least in the case of 4 and 5-star properties). On the downside, these areas are home some of the region’s most expensive properties, so the barrier to enter is a little higher than it may be in a less popular area. Finding a more affordable, compact apartment in the heart of the Inner City may be a good way for new property investors to break into the market. We recently published a guide to the top places to buy holiday rental properties. This guide has some useful tips on how to choose your area if you’d like to read further on this topic.

2/ Market

Who will be renting out your property? By trying to appeal to everyone, you may end up appealing to no-one instead. It is tempting to not target any specific market with the idea to appeal to everyone and anyone. Understanding the major travel markets that apply to Cape Town can be incredibly useful however. It can help you increase your bookings throughout the year, while also improving your reputation and helping you grow your business. Why is it important to consider your market? For starters, the needs of one market is often different to the needs of another market. If you buy an apartment in an area such as the Foreshore for instance, and that apartment is compact, within walking distance to the Cape Town International Convention Centre and fitted with amenities such as a work desk, it will likely appeal to business travellers. If on the other hand, you buy a three bedroom villa near Camps Bay beach, which has a lawn, family room, BBQ, swimming pool and bedrooms that maximise space, it will most likely appeal to family travellers. Your listings, photographs, renovations, decor, appliances, guest services and even your marketing strategies can be aligned to meet the unique needs of your ideal travel market.

3/ Management

How will your property be managed? Having a clear plan well before you begin the process of buying holiday rental property is extremely important. This is by no means a good time to ‘wing it’ or play it by ear, unless you are only dabbling in property rentals as a hobby. For serious investors who actually want to get ahead, it is vital to think about holiday rental property management from as early in the game as possible. Who will be responsible for the day to day management of your rental? Where (and how) will you market your property? How will you ensure that guests are given the best possible service? How will you manage bookings? The simplest and most effective approach is to work with an experienced short term rental property manager who is able to provide a full range of management solutions, from bookings to marketing, day to day maintenance and guest services.


Benjamin Franklin once famously said, “By failing to prepare, you are preparing to fail.” While it’s never fun to think about plans failing before they have had time to come to fruition, the worst mistake that any new investor can make is not having a plan from the very beginning. Waiting until you find that ideal property, or until you have ‘tested the waters on Airbnb’ can be fatal. The best way to take charge of your goals is to start thinking today.

If you would like to learn more about our unique, one-stop-shop approach to short term rental management, contact Totalstay today.