Many who own holiday homes in the current recession are starting to consider simply selling up to try to patch up other rising costs, feeling that a second home is just too great a drain on their resources.
Image from my trip to St Tropez
But this might well be a rash move, and one that could lose you the opportunity to make steady profits to actually help tide you through these dark times. You see, even in this economic climate, holiday home rental figures remain high and many families are turning to rented properties instead of hotels now.
They are seen in many cases as cheaper, more flexible alternatives and you can find out more about the financial side of owning a second home at Money Vista.
By holding onto your second home and just taking the time to manage its finances carefully, you could turn it into a steady second source of income. This can be done either by simply renting it out as a holiday home to others or by actually becoming a landlord and renting it out full time to tenants.
Though it will be possible to charge short-term holidaymakers a little more, you will need to be advertising and looking for new short-term tenants all the time, so the latter option could provide a more stable source of income.
What to consider
In either case, there are things you need to consider carefully. Firstly, to rent at all, you need to check with your mortgage-lender to make sure it is legal for this particular property. As mentioned before, if you’re renting the property out as a short-term holiday home, you’ll need to work out how you’re going to advertise it on a regular basis and what this will cost.
Many set up their own website for this purpose. It could also be worth signing up to holiday home database websites.
You may well also need a local agent to look after the property; shop around carefully and see what’s on offer and what they’re charging.
When working out the rent for your property, be certain to calculate what it’s going to be costing you in mortgage payments, taxes and insurance first. Also work out exactly what it will cost you to furnish the house for guests (don’t try to skimp on this, because the holiday home market is competitive and holidaymakers will expect good quality furnishings).
If you’re thinking of renting your second home on a longer-term basis and becoming a landlord, there are similar considerations. Essential here though, is that you get a proper tenancy agreement.
You can buy these from stationers firms; otherwise get a solicitor to draw one up specifically for you. Make sure it is sound though, because this will bind both the tenants and yourself for a long time.
The other vital thing with this is securing reliable tenants. Consider getting references from your tenants before signing any agreements and ensure these are completed thoroughly.