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6 Lessons for First Time Holiday Rental Investors

  • 2016-10-23

First time holiday rental investors have a lot to learn. From knowing where and when to invest, to doing the endless research that allows you to make an informed decision, everything you do affects your chance of success. Every investor has to start somewhere however. Many investors learn by trial and error, which, needless to say, can be costly in more ways than one. Avoiding common short term rental mistakes is a good start, but there are also many lessons to learn on your path to success.

What lessons are the most important to learn as a new holiday rental investor? Let’s have a look.

Important Holiday Rental Investment Lessons

Holiday rental investments typically focus on the short term property market. Properties are purchased for the sole purpose of renting out to business and leisure travellers on a nightly basis. In areas such as Cape Town that have a healthy tourism industry, this type of investment can be extremely worthwhile. Many areas within the Mother City attract large numbers of visitors over the busy summer season between November and April, with a constant flow of visitors throughout the rest of the year. As the city continues to gain recognition as a global travel destination, holiday accommodation continues to stay in high demand. For investors, this is great news.

 6 Holiday Rental Lessons for First Time Investors

With that said, succeeding in holiday rental property investment is not always easy. Success seldom happens overnight. In reality, it takes a great deal of time, patience, effort and even costs to see long-term results. The biggest mistake that new investors make is expecting fast results without taking the time to plan. This is why it is crucial to learn the basics before jumping in with both feet. Some of the most essential lessons to learn include the following:

1/ Use logic instead of emotion to make decisions

Buying a home for your own use requires a good deal of emotion. Buying a property to rent out to guests requires plenty of logic. Using your head to make decisions, instead of your heart, is vital. You cannot rely on your gut feeling, or choose a property that ‘feels right’. Buying the wrong property can be devastating to your success. Worse, it could end up costing you far more in the long run. Decisions should be informed and based on clear, sound stats and research. Get expert advice if you can, but at the very least, take the time to do your homework.

2/ Always have a plan

Some people have managed to enjoy a fair amount of success by winging it. Most however never really get beyond limited growth without a plan. A plan will allow you to always keep the bigger picture in mind. Think of it this way… if you do not have any idea of how to reach your goals, how will you ever reach them? Planning entails short and longer term strategies that dictate the type of property you wish to choose, the area you want to invest in, the income goals you want to meet and the steps required to reach your goals.

3/ Don’t rush or dither

It can be hard to find that happy balance. Rushing into things is never wise. You will be far more likely to make poor decisions, or give up too quickly if things don’t happen right away. Dithering can be just as damaging, as you may end up missing out on opportunities. Learn and prepare as much as you can, and then make your move. You will never know everything. Even the most seasoned of investors have things to learn. Waiting too long is just as bad as jumping in without thinking things through, so wherever possible, aim for a healthy balance.

4/ Learn how to be patient

Property investment is more of a marathon than a sprint. It takes time and effort, both in the short term and in the long term. Getting into it for the wrong reasons (overnight success; millionaire status; finding the “next big thing”) is never a good idea. Maintaining a healthy dose of patience will help you minimise expectation and keep your eye on the prize. This is why it is so useful to plan, avoid rushing and use logic rather than emotion to make your decisions.

5/ Familiarise yourself with the market

You need to have a solid understanding not only of the overall holiday rental market in Cape Town, but also the various travel markets that apply to South African tourism. You need to understand the difference between business travel markets and leisure travel markets. You also need to understand travel seasons and how they affect bookings. You need to know each area well and have an understanding of property values and average rates for each area.

6/ Buy the right property

Understanding your markets and target area will make it easier to purchase the right property. There are many different types of holiday rental property – apartments, villas, houses, aparthotels, cottages, guest houses and B&Bs. Each type has its own advantages. Over and beyond property types, there are many other things to consider. Will the property require renovations or is it already prepared for short term rental? Is it in the right area, at a price you can afford? Choose wisely, using your head and not your heart.


Another equally important lesson for new holiday rental investors is to work with an experienced short term rental property manager. A qualified manager will help you develop and implement strategies for long term growth, giving you the advantage of a full service marketing and management solution. To learn more about working with Totalstay, contact us today.