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Can You Profit From Investing In Vacation Rentals?

Mar 27, 2008
With most stocks and shares worth less than they were a few years ago, many people are putting their money in apartments and villas to let to holidaymakers. The hope is that rental income will finance the ongoing costs and will in time pay off the mortgage. Is this feasible?

If your property is in a popular area, especially one that attracts visitors all year rather than just the summer months; then the rental income should cover the costs of the mortgage and the maintenance of the property. So the basic business plan is viable. The next question is should you employ an agent to manage the property if you do not live nearby? The experience of many absentee owners in Spain suggests not.

Alarming reports in the papers about agents omitting to tell owners when their properties have been let and pocketing the money suggest that, unless you have some way of keeping tabs on agents, it would be advisable to take time to manage bookings yourself.

If you opt to handle bookings yourself, the Internet hosts many sites where you can advertise your self catering villa. Most sites provide an availability calendar which you control and a booking form. So, whilst it will take time and effort on your part, it is also feasible to manage bookings yourself, thus saving the agent's fees.

The secret of success is to make yourself available at all times. If someone wishes to discuss a booking they have to be able to contact you either by telephone or email, and you need to respond with little delay. Keep a potential customer waiting too long and he will take his business elsewhere. It will also save you time if you keep your availability calendar updated. If a customer contacts you wishing to book dates that the calendar shows are available but that are already booked, your time is wasted and, more importantly, the customer is annoyed and probably less likely to accept alternative dates.

Of course the property has to be cleaned between lettings and, if you live hundreds of miles away, you cannot do this. However, there are enterprising folk who have set up businesses to clean villas and to be available to hand over keys to incoming holidaymakers.

In spite of the advantages of managing the lettings themselves, some absentee owners are unable to find the time and they will be compelled to use an agency. There are good agents of course, so seek them out by asking for references and talking to other owners. Go through the rental agreement carefully to make sure there can be no confusion about the agent's duties.

A useful deterrent to prevent the agents letting your property without your knowledge or reward is to arrange to pay the utility bills yourself rather than entrusting this task to the agent. If the readings show electricity has been used in any quantity your villa must have been occupied and you will be owed rent. Often the knowledge that you have the ability to catch an agent will ensure he behaves in an honourable way.

If you treat your holiday villa like a business there is no reason why it should not be self-financing, and provide a foundation for a portfolio of holiday rental properties.
About the Author
Self catering vacation rentals can be a viable venture if you purchase a holiday villa or apartment in the right area. Avoid expensive agent's fees by handling the bookings the villa yourself and advertise your villa on our website.
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