What to Expect When You’re Investing in a Holiday Home
Investing in property for many people – whether for personal use or as a pure investment opportunity – can be an excellent option. With scrolls of pages online that will tell upcoming investors why property in general is a worthwhile investment to make, the process and decisions involved can feel very daunting. What it comes down to is one simple question: how can that dream or goal be turned into a reality, and which opportunity will lead to the necessary return?
Creating a Passive Income
Property investment can become a fantastic source of passive income, offering consistent cash flow for many years to come. What’s more, you do not need to be an expert or have a special skill set to reap the rewards of this exciting and rewarding venture.
Holiday lets, particularly in the UK, represent a great investment opportunity. The value of domestic holidays taken by British residents is forecasted to grow by almost 100% by 2025, from c.£8bn in 2020 to c.£16bn in 2025. Add to this the fact that UK property prices typically consistently rise, save for the occasional blip along the way, and the opportunity looks even more appealing. In Cornwall for example, average price increased by 17% for the 12-month period to August 2021, compared with 12% across the UK.
When buying property for holiday letting purposes, look for properties with guaranteed return on investment. At Stephens + Stephens, for example, we offer a minimum 10% gross yield guarantee to buyers investing in holiday homes in Cornwall over a five-year period, irrespective of the performance of the asset or market fluctuations. We genuinely believe that the demand for holidays in Cornwall – both from domestic visitors and those from further afield – shows no sign of slowing down. That’s why we are so confident in the potential for significant earnings.
Do Your Research
Having a basic understanding of location, style, and how to finance investment properties is all you need to start the journey of holiday property investments.
In the UK, we are blessed with some incredible holiday destinations – sandy beaches, rugged and unadulterated landscapes, mountains to explore, and so much more. One of those locations, which has a long and fruitful history of welcoming tourists, and where holiday makers continue to choose year upon year in their masses, is Cornwall.
Cited as one of the UK’s top five earning regions for property owners, Cornwall offers holiday makers stunning scenery, a unique microclimate, surf culture and top-quality gastro options. It is easy to see why Cornwall has been voted the best location in the UK (and third best in the world) to provide a return on investment from holiday home letting. Picking a popular location such as Cornwall, where properties are often booked far in advance, is as close to a sure thing as you’re ever likely to get.
Target audience should also be a key consideration when looking at both location and house style. Are you looking to attract families looking for a budget break, or a more discerning customer who wants an ultra-luxe staycation? And of course, if you’re planning on using the property as a personal holiday home as well, what does your ideal holiday home look like? An apartment overlooking the sea, or a house tucked away in a quiet and hidden corner surrounded by countryside? In Cornwall, you’ve got it all to choose from.
Other Practical Considerations
Is the property easy to reach by car or train, and how will this impact your target holiday maker?
Make sure you know how it will change your tax. For furnished holiday lets, owners can claim capital allowances that mean the cost of furnishing your property to a luxury standard – increasing your potential rental income – can be deducted from pre-tax profits. This is not an option available to long-term rental properties.
Buy to maximise rental income – while property decision making often comes from the heart, let your head lead the way in the world of investments.
As with any property purchase, ensure the relevant checks and surveys are completed.
Ensure a fast internet connection is available, especially if it is rural. Wi-Fi is one of the most requested features and could be the deciding factor when guests are debating one property over another.
When budgeting for your investment, make sure you consider all the costs involved. From the actual property purchase to stamp duty, insurance, and furnishing – you do not want to suddenly find you must pay for a cost you were not aware of.
The Extra Touches
The finishing touches are down to the owner, but considerations to include are:
Décor should be carefully considered, with beautifully styled properties having the edge needed to stand out in a busy market.
Optimising the amount of natural light is also key. Our Creative Director Helen Stephens suggests a few tips and techniques in this great blog about how to let light into your property, read it here.
For those investing in a property not too close to home, having a trusted and experienced letting agent on hand is necessary for peace of mind. Sunrise + Sunset, for example, continues everything that is so distinctively Stephens + Stephens and looks after some of Cornwall’s finest holiday properties.
Whether you’re looking to invest in a buy-to-let property or are keen to add a stunning Cornish bolthole location to your list of assets, we would absolutely love to hear from you. Having been in this business for over thirty years, we’ve seen it all and would encourage anyone with questions to draw on our experience. We are always more than happy to have several conversations with any potential investors, and will never attempt to push you into anything. By getting to know you and understanding what you’d be looking for in a Cornish investment property, we can talk you through your options in a simple, clear manner. Give us a call to get that conversation started on 01872 264775, or fill out one of our online contact forms.
We can’t wait to hear from you!