For many investors, a holiday home investment seems like the next logical step in developing and diversifying their property portfolio, but which global destinations offer the best yields and most potential for rental returns season after season?
In recent years, holidaymakers have opted for a “home-from-home” experience when it comes to choosing the annual holiday destination and in order to guarantee success, investors must meet these new demands. The needs of customers aside, holiday home investments are in fact very lucrative and can offer unprecedented returns. Unlike hotel room investments which are shared through fractional ownership, as a holiday home investor you solely own the property and therefore you can control the yields whilst securing a full share of the profits.
Just like any other property investment, you must understand the current market and know which countries, states and regions are most suited to this particular type of investment. Research by Schofields, a holiday home insurance company, found that the U.S. offered the best returns for holiday homes followed by Europe.
When calculating the potential return on investment (ROI), Schofields took a range of factors into account including the average cost of a property, potential rental income and the long term popularity of the destination itself. The research revealed that the Sunshine State’s city of Kissimmee was the most lucrative for holiday home investments with a ROI of 26.02% followed by Barcelona at 18.78%. Lake Garda, Italy; Faro, Portugal; Nice, France; Avignon, France; Marbella, Spain; Cornwall, England and the Lake District, England was also among the top destinations for holiday home investment in Europe.
To fully understand the market, you must first understand what all these destinations have in common – sun! Kissimmee and Miami, two of the Sunshine State’s most popular cities, dominated the rankings followed by Barcelona, Italy and Southern France which all boast tropical temperatures and the sunniest of summers. With a temperature low of 3 degrees Celsius and some of the bleakest and most adverse weather conditions, the Lake District ranks poorly compared to its sunnier counterparts with a ROI of 2.89%.
Any successful and professional property investor aims to enjoy rental returns throughout the year regardless of peak seasons and the easiest way to achieve this is to optimise and advertise your holiday home effectively. For example, you could rent or let to students studying in the city throughout the academic year but let to families, couples and holidaymakers during the seasonal holidays. This will ensure that your rental returns are as frequent as possible and your return on investment is profitable as a result.
For those investors looking to take the next step up the property ladder, holiday home investment is the perfect opportunity with a range of options on the market. The benefits you can reap with this particular type of investment are endless, and you can even jet-off, spend a week in the sun, unwind and enjoy your holiday home in the quieter periods. Just like with any investment properties for sale, there are factors to consider and decisions regarding money and commitment should not be taken lightly. If you can dedicate the time and resources to holiday home investment and find a prime and perfect location, then you could be seeing significant rental returns within a matter of months.