Vacation homes may prove to be valuable assets, given that you invest in the right property. With the uptick in traveling all around the world, and the thriving tourism industry in the Philippines, renting out holiday properties is fast becoming a source of revenue for the savvy investor. But before you snap up that breezy beach house, or that cozy mountain lodge, consider these key factors that make or break an investment in a holiday home.
As they say: "location, location, location." It is, arguably, the most pertinent factor in real estate. Your vacation home must be situated in a promising location: somewhere in-demand (or about to be in-demand), accessible, safe and secure, and which provides for a number of nearby features and conveniences, like a nice view, a pleasant atmosphere, and accessibility to the local attractions or establishments that provide necessities or amenities. Research thoroughly and consult seasoned agents, locals, and other property consultants regarding the location of your vacation home. Take note that properties located in popular destinations are pricier; properties in less frequented areas tend to be more affordable. Make sure that the destination, nonetheless, is poised for an increase of tourist activity, to rake in larger returns in the future, and make the most of your investment.
Size, type, design, construction quality, infrastructure, condition, and location contribute to the property's value. Be smart about what you can afford. A one-room guesthouse; a rustic cabin; a fabulous, modern construct with all the accouterments -- opt for the type of vacation home that's well within your means, keeping crucial figures like the downpayment, monthly amortization, the mortgage term, property taxes, and other fees in mind, and in relation to your financial situation.
Consider how much you can rent out the property for. As with the cost, rent is dictated by the quality of the property, its features, and its location. Opt to raise the rent during peak seasons and offer discounts during the slower months. Charge as needed with the use of facilities in mind.
4. Upkeep and maintenance
Beyond the mortgage, upkeep and maintenance factor into the costs. Attend to your property, keeping it clean and in good condition. Establish house rules for your guests to keep them from misusing or damaging the facilities and features of your property.
5. Long-term potential
Ideally, investments have to hold up for as long as you are in possession of these assets. The location and condition of your property, in particular, are important to this end. The location must remain popular, promising, or on the rise -- but not to the point of over-development or over-saturation, which will depreciate the value of properties in that destination. Keep your property well-maintained and provide for satisfactory, consistent, and reliable service for your guests to keep them coming. Keep rising interest rates in mind and take measures to ensure that you can maintain and earn from the property throughout the years.