Is it a good idea to buy a holiday home as an investment?

I am just back from a lovely break in Doolin, Co Clare . It is a lovely part of the country, with beautiful countryside and lots to see and do. One thing that struck me though was all of the empty holiday homes in the area. Lots of people buy holiday homes with the intention of using it themselves for some of the time and renting it out to generate an income. But before you dive into buying a property in a holiday resort, you should ask yourself these questions:

How often will you use it?

You are going to spend a few hundred thousand euro on a property. Are you going to get use out of it? Are you happy to going back to the same place time after time so that you get value from it? Or are you thinking of moving there for part of the year?

How much does it cost to rent in the area?

There are no end of rental properties available in most tourist towns all over the world. How much will it cost to rent there instead? Remember, if you intend to go back there on a regular basis, the property owner will quite happily block book dates for you into the future.

How long do you want to hang onto the property for?

Properties are long term assets. If you only want to have it for a few years, it might turn out to be very expensive when you take purchase and sale costs into consideration.

What is the rental market like in that area?

Will you be able to rent the property? A report in 2014, found that there were 1.4 million empty homes in Spain. The construction of thousands of apartments along the coast certainly helped add to that figure. Are you buying in an area where everyone is trying to rent?

What is the property market like in that area?

As well as assessing the rental market, what is the buying market like too? We make investments to make money. If you buy a holiday home as an investment, what are the chances of you making money from it? Is it in an area that people love going to? Have to narrowed the market of who you can sell it to by buying in a complex? How easy will it be for you to sell it?

As you will be using it yourself, you will be looking at short term rentals. What periods of the year can you rent it?

A few years ago, I went to Annecy in France for my summer holiday. As well as it being a hugely popular summer resort, it is just as popular in the winter for those who enjoy winter sports. Property owners then have two peak seasons that they can rent their property for. Most people buy with just the summer months when they can get rentals and the property sits empty for the rest of the year.

How much are the management costs of rental?

You will have to pay a local agent to look after the property. For holiday rentals, the turnover of renter will be very frequent so you will have to pay someone to clean the property in between renters. You also have to factor in the increased likelihood of breakages. People are going there for their holiday and are likely to be drinking more. Add in, you probably won’t get to vet them beforehand so you have no idea who is in your property.

What are the local tax laws?

You need to familiarise yourself with the local tax laws. Every country is different and you don’t want to find yourself with a massive unexpected tax bill.

If you are interested in buying an investment property, I suggest you buy one that can be rented out all year round, with tenants on a lease. If you want a holiday home, buy one that you and your family can enjoy, whenever you want. Remember, the time that you get the best rent is the time that you will most likely want to use it too. It is rare that I have seen a holiday home also work as an investment property.

If you have any questions, send me an email to