Buy Home · May 2, 2021 35,193

Tips for buying a vacation home as an investment

During the last decade the housing market has suffered the serious consequences of the crisis and the real estate bubble. Even so, small and medium-sized investments have continued to opt for placing their savings in the brick by buying flats, houses, commercial premises or garages.

And it is that in the acquisition of tangible properties is above other more volatile investment options such as the stock market. The reason is quite simple: traditionally the real estate market is considered a safe haven and its chances of return are reasonably high in the medium and long term.

For this reason, it is estimated that around 20% own at least two residences. Of them, the majority are people between 35 and 55 years old who own their habitual residence.

What should I take into account before investing in a vacation home? 

Having a vacation home in the mountains or on the beach can be an illusion and, if you know how to manage this property, it can also bring you economic benefits. This, in general. However, before buying a vacation home it is important that you are clear about its use. In this way you can assess to what extent it is a good investment.

Our advice is that when considering an acquisition of these characteristics you should be clear about:

  • If you are going to make personal use of the property as a vacation home or second habitual residence.
  • If you are going to use it for rent.
  • If you are going to use a “mixed” formula, that is, occupy the house for part of the year and rent it for the rest as a holiday home.

On the other hand, if you are going to buy a vacation home, it is also essential that you choose well the place where to do it. As you already know, there are more touristy areas with a greater demand for accommodation, and that makes the properties there have a higher value for both rent and sale.

Our advice is that you opt for urban environments and close to services such as shops, hospitals and leisure spaces. If you want to make a mixed use of the home, it is also important that it is relatively close to your usual address.

The other fundamental point before buying a vacation home is to study the financing and how it will affect your daily economy. If you ask for a mortgage to buy a second residence, it will be one more expense that you will have to assume every month.

Remember that experts recommend not investing more than 40% of our income in mortgage expenses, rentals, etc. To this amount you must add the maintenance expenses (water, electricity, gas, taxes, etc.) that you must assume and pay even if the house remains unoccupied for much of the year. In any case, if you rent the house as a holiday residence, calculate that its profitability can go from 3% to 8% per year with Sky Marketing.

5 tips for buying a vacation home 

If you have decided to buy a vacation home, you must assess different aspects in addition to the situation of the real estate market. For example, the market price: you cannot compare what a villa costs with what an apartment costs, for example.

At Deplace, as an online real estate agency with experience in the sale of homes of all kinds, our tips for making this type of investment successfully are:

Before starting, study your possibilities 

Before buying a vacation home, you should carry out a study and analyze aspects such as the mortgage investment that you can assume, the benefits that it can generate in a rental regime or its revaluation for a future sale.

This will also be the time to decide if you prefer a newly built or second-hand home, although in the case of vacation homes it is more common to opt for the second option. You should also think about what type of property you are interested in buying as an investor (size, equipment, facilities, etc.)

Choose the best area to invest 

Beach and mountains are the most desired destinations to spend the holidays, and they are also the safest option so that buying a second home becomes a really profitable investment. If you bet on an area with a pull in the market, the property will have a higher purchase price, but your profitability options in the future will also be much higher.

Some Spanish provinces such as Alicante, Malaga, Tarragona, Las Palmas de Gran Canaria, Baleares, Galicia, Huelva, Cantabria or Cádiz are considered a good alternative to invest in a holiday home as they are tourist destinations with a high demand practically throughout the year.

In any case, if you are looking for a holiday home as an investment, we recommend that you visit the area to get to know it before making a decision.

Hire a real estate agent to advise you 

Hiring an expert in the area with experience in the purchase of second homes will help you find a home that fits your needs and your pocket.

At Deplace we will fully understand the offer that fits you, we will help you compare different options and assess their pros and cons, we will speed up negotiations, we will advise you on financing and we will verify that the house is in good condition.

Find out about the fixed expenses of the house

Do you know all the expenses involved in buying a vacation home? In addition to the fixed cost of the mortgage, before making the acquisition you must study the average cost of expenses such as electricity, IBI , community expenses, insurance, etc. Knowing all these costs will help you organize your finances and establish a prorated rent with benefits to cover all expenses without problems.

If you need to make a reform, having the energy efficiency certificate of the house is essential to make improvements with which to reduce energy consumption.

And most importantly: think of it as an investment for the future 

Some people invest a considerable amount of money when buying a vacation home, but is it worth spending more on a second residence than on the main residence? This decision may not seem to make sense, but in some cases a vacation home is like an investment fund for retirement. And if you also like the area where it is, it is possible that over the years you will even settle there permanently. In this sense, the more equipped your vacation home is, the better.

There are also those who doubt between renting the holiday home throughout the year or doing it only in summer. In this case, it depends on the situation of the investor.

  • If you rent it throughout the year, the profitability is lower but the income is fixed and therefore safe.
  • If you rent it only in summer, you will be exposed to the supply demand, although you can also earn more money in high season. Normally, if you have taken out a mortgage to buy the vacation home, having a fixed income can be a way to cover expenses such as, for example, the loan payment.

Before buying a holiday home, it is advisable to seek expert advice. This investment can be very profitable for you but you must assess many aspects and no one better than the professionals in the sector so that no details are missed. Are you looking for a vacation home on the beach or in the mountains? Contact Tajarat properties.