Tourism is one of Spain’s top economic activities. So, investing in property for holiday lets is a great business opportunity. In this article, we reveal the main benefits of this investment and what kind of profit you can expect.
Why should you invest in a holiday let?
The main difference between a holiday let and a long-term let is its short-term nature. The accommodation is available all year long and the price varies depending on the month that the booking is made for. This is what makes the profit of a holiday let much higher compared to other investments.
Apart from the fact that it’s a successful business model, it’s also simple to manage. You just need to be responsible for managing the bookings and supervising the property to ensure it’s in good condition. As you can let it out all year round, it will give you a monthly income, bringing you regular benefits.
Another advantage of this business model is that the investment risk is minimal as guests mostly pay in advance. You can also charge for different extras, such as cleaning, bed linens or a deposit to cover any damages.
Moreover, lets are usually very short, so the condition of the property is not affected. You can visit the property every so often to make sure that it’s kept in good condition in between one customer and the next.
What is the average profit of a holiday let?
To calculate the profit of a holiday let, you need to evaluate different factors. The most significant expense that you need to assume is the cost of the property itself. However, if you apply for a mortgage, you can pay back just a small amount each financial year.
If you already own it, the only thing that you will need to bear in mind is to pay the tax and community expenses. It’s also a good idea to have insurance and to save a precautionary amount for repairs or management fees if you are not going to take responsibility for the bookings yourself.
When you have made all your calculations, the next thing to do is to make a forecast of the occupancy that you’ll need to have to cover the expenses outlined above.
Tips for holiday let profitability
If you’re considering investing in a holiday let, it’s essential that you find a good area in which to make your investment. It’s also very important that you have a clear target audience. Essentially, what kind of people are going to rent your property. In this case, the price per night will be what makes the difference. Finally, you need to assess the investment needed to make the apartment to your liking. Then, the property will be able to offer guests certain features.
If you are considering aiming the property at an exclusive audience, appearance, decor, materials and finishing touches must be in keeping with the price you are asking. You will also need to ensure that you meet all the needs that those customers may have.
On the other hand, if you are thinking of renting it to young people (the risk of damages increases as a result of carelessness), remember that your investment in furniture shouldn’t be as high or as carefully considered.
Another relevant aspect is whether or not pets are permitted. If you do allow them, the cleaning expenses will be higher and there may be more damages if the pets are left alone in an unknown setting. The neighbours may also complain. On the other hand, you will be offering added value to many people who cannot access other lets where pets are not allowed.
In Spain, there is a holiday let act in force, but each town or autonomous region may also have their own regulations. So we recommend that you find out more about this particular issue.
The most profitable cities for investing in holiday lets
Certain cities stand out for being more in demand during high season months. Managing a holiday let in Alicante and in Murcia is a great option. Also, Cantabria and the Basque Country are some of the areas where more is currently being invested to offer holiday let properties.
These first two cities are characterised as being exclusive beach destinations, whereas the other areas are more multi-purpose and you can find tourists seeking the sun while others prefer a more rural, mountain experience. Don’t wait any longer and take the leap into the holiday let adventure. It’s a great investment option and requires very little time to manage.
