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Is Vacation House Rental a Good Investment?

  • 2016-10-29

The vacation house rental market continues to grow at a rapid rate. Many first time investors are drawn to the idea of having a holiday home that can be enjoyed a few times a year, while bringing in extra money the rest of the time. Other would-be investors have been inspired by the growth of platforms such as Airbnb, with dreams of making a fortune.

While it is entirely possible to succeed in this often competitive industry, it is not always as easy as putting up a listing and waiting for the profits. Property, and especially short term property, is an investment that requires a fair amount of strategy, planning and effort. Often, it also requires capital.

Just how good an investment is vacation house rental? And, what should you keep in mind when considering this investment?

Vacation House Rental as an Investment

Property is often said to be one of the best investments. There are many different facets to the property market however. Some investors purchase property with the sole aim of “flipping” (renovating and selling at profit). Others focus on the long term rentals market. For those thinking about the short term rentals market, the rewards can be excellent. That’s not to say that this market does not come with its share of challenges though.

Is Vacation House Rental a Good Investment

Some things to consider when deciding on whether this investment is right for your needs include the following:

  • Holiday rentals typically have a high income potential. As properties are rented on a per night basis rather than a per month basis, your earning potential can often be lucrative. The catch is that occupancy is required to be consistent throughout the year – including low seasons when tourism is at a low. You will therefore need a solid strategy on how you will keep your bookings up all-year round. You may also need to factor in a number of costs, from housekeeping services to professional short term rental property management.
  • You can also enjoy your holiday home. Another upside to investing in this type of property is that you can enjoy it when it is not in use. You could book a stay during peak times, or wait until quieter times when the property has a vacancy. You can also offer friends and family a place to stay. In cities such as Cape Town, this means that you can enjoy your very own world-class holiday without having to worry about finding hotels or other accommodation.
  • The travel market is booming. Here in Cape Town, tourism rates are consistently high. Thanks in part to numerous travel awards, world-class beaches, first rate attractions and the mild Mediterranean climate, the Mother City is a popular choice in the peak summer period. Even during the quieter winter season, there is a continual influx of visitors coming to the city on holiday as well as business. This is good news for those in the holiday rental space.
  • Planning for retirement? From a long term perspective, investing in property of any kind is a good way to plan for your retirement. The advantages are twofold. On one hand, you will have a property that you can one day enjoy for your retirement. On the other hand, you can start saving for your retirement with the income you earn from renting your property. With a smart strategy, this is a win-win situation.
  • You can manage your property remotely. One of the main reasons that many first time property investors fail is that they are unable to keep up with the demands of managing and marketing their property. This can be a full-time job that is extremely difficult without experience and a complete understanding of the market. With the help of holiday rental property management, you don’t even have to live in the same country as your property. The new breed of managers can do anything and everything, from managing your bookings calendar to actively marketing your property across multiple channels. Day to day management is also provided, along with ongoing strategies that help you get the most from your investment.

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Interested in learning more about managed vacation house rental? Contact Totalstay today and let us show you how we can take your property to the next level.