Home Investments Is Investing in a Holiday Rental Worthwhile?

Is Investing in a Holiday Rental Worthwhile?

by James McGregor

There are many people that have a property that they let out to people as a holiday home. This might be the sort of investment that you might be considering and it is a good idea to have a think about it before you do it. There will be many advantages and disadvantages and it is a good idea to make sure that you are aware of these before you make the investment.


Most holiday rentals will be seasonal. Many people go on holiday when the weather is warmer and around school holiday times as well as religious holidays. This means that you will find that the property will be more popular at these times. If your holiday home is in the UK, then you will find summer, Easter and Christmas will be likely to be the most popular times as they are when the school holidays fall. This will change depending on the country that the holiday house is in and you will need to find out what seasonal demand will be like there. Of course, if you have a small property, not large enough for a family, then this might be different as school holidays will not be so important and actually some people may avoid taking holidays during school holiday time, so they get a quieter experience without children around. You will tend to then find that it could be weather dependent with warmer times of the year being more popular. Some people will charge different prices at different times of the year to reflect this and so charge more in summer, than in winter so that they can still encourage people in even though there are less people likely to want to stay. It is worth therefore considering whether you will be able to cover all of your costs if you do this. 


Some locations will be more lucrative than others with regards to holiday rentals. For example, if the property is on the coast, near a popular tourist attraction, large city or national park, then you will find it easier to rent out. However, this will not be the only factor. You may need to consider how close to the attractions you are and how easy it is to get to them. Also, people may prefer places that are tucked away and quiet, but close to amenities such as a shop and pub or even a bustling town. Obviously, there are different types of people and they will have different tastes as to what they want from a holiday home. If you are looking to buy a place to rent out, It would be wise to look at different holiday house rental companies and see what sorts of places they offer and then you will be able to decide whether what you have in mind will work. Also compare what they charge as you may find that location has a big influence on how much people will be prepared to pay to stay there. 


It is very wise to have a good idea of the costs before you start. It is easy to think that it will be a great way to make money, but you will have to pay out as well and you need to be sure that you will be able to make enough money to cover all of your costs. If you have a seasonal income, then the popular season takings will need to cover costs from the quieter times as well. Costs will include maintenance of the property and mortgage if you do not own it as well as council tax. You will have to cover the utility bills such as broadband, electricity and gas and there will be safety checks that you will need to be done. You will have to have the property cleaned between guests and the sheets and towels laundered. This is all on top of the costs of buying the property in the first place (or putting down the deposit) and furnishing it as well. You will also need to consider the fees of listing it as many holiday lets will go through an agency. You will have to pay someone to come and clean between guests and change the linen, as well as to have it washed and ironed. You could do this yourself though, if you live nearby. You will also have to keep the property in good condition, replace any breakages and make sure furniture is clean and rooms are painted. 

If you have a mortgage on the property you will be at higher risk. This is because if you do not make enough money in rental income to cover the mortgage repayments you will need to pay them yourself. Although, your lender will actually check that you will be able to afford to do this, this does not mean that it is a situation that you will want to find yourself in. You will probably want to be able to spend that money on yourself and also if you have a lot of months when you are having to find this money, you could find that you will get into trouble. You also may find that the rental is not turning a profit which will not be good for you either. It is wise to therefore have a very careful think about whether it is a wise idea for you to get a holiday let. A long term let is an alternative idea and you will have tenants in more of the time and they will be paying the same amount of rent all year round, however, holiday lets can charge a lot more money and this means that there is the potential of making a bigger income, although there are different costs to take into consideration with a holiday let compared to a long-term let.

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