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Investment Opportunities With a Second Home

By: Garry Crystal - Updated: 28 Sep 2012 | comments*Discuss
 
Second Home Investment Opportunity

Buying a second home is a major financial outlay but there can be significant investment opportunities that come with a second home purchase. When an economic downturn occurs many second home owners do consider selling but renting can be a cost effective option.

Why Buy a second Home?

Most buyers do look on second home purchases as an investment opportunity while others may buy a second home to use as a holiday home. Property is always considered a good long-term investment if the buyer chooses wisely and can comfortably afford the property. The second home investment opportunity can become more lucrative if the owner decides to rent. However, those considering renting their second home do need to be prepared for the extra time and effort that becoming a landlord entails.

Renting Out a Second Home

A large number of second home owners have made the transition from owner to landlord. This is an excellent option that can cover mortgage payments and bring in extra cash without having to sell the second home. With less people buying in the UK renting is now seen as the cost effective option, and this trend looks set to continue. Location will be a major factor in successfully letting a property and achieving a premium rental price.

Second Home as a Holiday Rental Option

Second homes abroad can fetch a good rental price especially in tourist heavy locations. However, second homes in the UK can also be let as holiday homes depending on the location. If the second home is located in seaside towns or major cities then letting as holiday accommodation should not be too much of a problem. If the second home is located in a sunshine destination then the priority is renting out during the peak summer months. This is the period where owners can make enough money to cover the mortgage payments during the off peak seasons.

Second Home and Residential Letting

Letting out a second home to tenants on a permanent basis can seem daunting. However, there are agencies that will take the hard work out of this task. A letting agency will screen prospective tenants, obtain rent money and deposits, and deal with repairs to the property. There will of course be a fee when using a letting agency but this may be worth the cost when it comes to peace of mind. Becoming a landlord can take a lot of time and effort and owners should be prepared if they are intending to take on this task.

Second Homes as Long Term Holiday Rentals

Another option that has been growing in popularity is to rent out the second home on a semi long term basis. Sometimes known as flexible letting, this allows owners to let out their holiday homes for a longer period during the quiet seasons. Rental periods are usually between two and five months, and this type of rental is used to bridge the gap between the weekly holiday rentals and permanent residential letting. Many tenants are people working away from their own area who are looking for semi-permanent accommodation.

Marketing a Second Home for Rental

Getting the best rental price for a second home is a priority. Good letting agencies will know exactly how to market a property to achieve premium prices. Home owners who are considering renting their property should listen to the advice given by letting agencies. Considerations should include –

  • Market holiday homes to specific groups such as romantic breaks or weekend city break accommodation
  • Make sure furnishings are to the highest standard; this should help raise the rental price
  • Always aim for the top price for holiday homes during peak seasons
  • Act on advice give from letting agents; they do know how to obtain the highest prices for rental units
  • Be prepared to negotiate on price especially when there is a lot of surrounding competition
  • Consider negotiating deals for long term holiday rentals during the quiet seasons
  • When buying a second home abroad as a holiday rental option always thoroughly research the holiday rental market
A second home can be an excellent investment opportunity but it is not a purchase to be taken lightly. Always undertake as much research as possible especially when it comes to the legal aspects of buying a home abroad. Take as much professional advice as possible whether buying as a holiday home or a letting option.

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