Making The Most Of Your Holiday Home

Almost 1.6 million people now have a second home in England and Wales, with 820,000 owning a second property abroad, according to the 2011 consensus.  For many renting out that second home to cover costs and mortgage payments makes good financial sense. Even high profile owners at Royal Westmoreland in Barbados such as ex professional boxer Joe Cazaghe and Premier League footballers Wayne Rooney and Thomas Sorenson have realised that there is a good income to be made from their property when they are not in residence.

One only has to look at the villa rental site Owners Direct to see the vast number of holiday rental properties that are available to hire.  So how does a potential buyer of a holiday homes ensure that their property has rental appeal? CEO of Royal Westmoreland Greg Schofield  says: “ Proximity to facilities such as the beach, a golf course, swimming pool and places to eat and drink are always cited as the most important factors for rental guests.”
At Royal Westmoreland, home owners can rent out their villa through the management company and for many this is a hassle free way of doing it. The other alternative is that owners rent out their villa directly themselves and some use agents to help with that.

Greg Schofield  has seen how many owners have made a success of renting their properties and offers the following advice “Generating rental income from a holiday home works best when the owners get involved themselves. To simply sit back and leave it to an agent will not typically produce a consistently profitable rental home. Our homeowners that have been successful work at selling and marketing their property themselves as well as using an agent. They list it on sites like www.ownersdirect.com or www.vbro.com and additionally set up their own website for the property. They also advertise in local papers at home or in village post office or school notice boards. One villa owner works for a big city bank and they have an inter-company web page that they list their holiday home for rental on.

“Then when guests leave they work at staying in contact and getting repeat bookings. I tend to find that after three years of working at it they have a good base of repeat renters to supplement the new business they get. The problem with relying on agents is that they tend to be passive overall, typically producing for the low hanging fruit times like Christmas or Easter when you either want to use it yourself or rent it to your friends directly. When most rental properties need help is in the shoulder/low season, so having an active engaged owner who promotes their property directly will see these periods book more easily. Also it’s important to take into account that the rental agents make their money by charging a commission taken off the top of the rental income, so the profit is higher on direct bookings.

“Finally it’s important the homeowner weighs up the lifestyle reasons they based their purchase upon. For instance Christmas and new year rentals in Barbados are very valuable with rates being extremely high; a good booking can provide enough money to pay many of the bills you have in January like club membership and property owners association fees. However what’s the point of having the property if you’re not using it yourself. Therefore I tend to tell owners not to look at the occupancy percentage but to set a rental revenue figure that they want to achieve that’s balanced and takes into account their desire to use the property.”

At Royal Westmoreland a three bed townhouse with pool a ‘Royal Villa’ had a rental revenue last year of £73,000, representing a return of 7%. A four bedroom villa with pool had a rental revenue over the last twelve months of £104,000 representing a 5 to 6 % return. These figures quoted are for two properties they rent out under the rental guarantee agreement when the property was purchased. An owner can typically rent out their property for 10 to 12 weeks per year.