Today I decided to work out the difference between renting my house in Fuerteventura as a holiday let vs. a long term rental. I sacked my agents last July which I wrote about here, I also updated you about the joys of holiday home ownership here!
Now almost a year on and with my bookings calendar complete to the year end I am able to sit down and calculate was the extra effort and expense worth it?
So let’s be honest when I decided to rent my property as a holiday home and manage it myself there were cost implications. Firstly, I had to provide a lot more furniture and stuff at the apartment than what I did before and I had to upgrade several pieces. The sort of furniture you have in a holiday rental needs to be a better quality than in a long term rental – after all you only have a week to make a good impression so the bed better be comfy!! In a holiday rental you also need more “stuff” than you would normally provide in a long term rental – so I had to buy some added extras such as an ironing board, an iron, hairdryer, TV, stereo etc. And all those extra things cost money!
As a holiday let you then have the cost of advertising. I decided from the outset to go with Holiday Lettings and they have been very good. It cost me about £280 to advertise for the year. While the cost of advertising on holiday rental sites seems quite a lot (especially when you have to pay for it in a lump sum and upfront) when compared to the 10% you would pay an agent for managing your property it compares very favourably indeed! But let’s be honest, if you are paying an agent a managing fee then you don’t have to manage the property and so you don’t have to worry about the advertising at all – so I’m not comparing like with like there.
So let’s compare the amount of time I now spend managing the property as a holiday let compared to when I had it managed by an agent as a long term rental. I have totted up the amount of time I spend on the property and it works out about 2 hours per week, or around 8 hours per month as a holiday let. Previously I would spend maybe 2 hours per month as a long term rental as the agents would always be onto me about something – whether it was the water meter reading or to tell me about a maintenance issue – there was always something which required me to think about, decide or act – or do something!
What I want to stress though is the quality of that time spent now as a holiday let vs. the time I spent when the property was managed as a long term rental. Previously I found everything to do with the property was a problem that was being reported – a maintenance issue, a tenant issue – whatever – it was always negative. Now, when I look at the time I spend on the property it is always positive! Yes, I have had a couple of maintenance issues but in the main my time is spent chatting with holiday makers in a positive light. My time is spent recommending places to go, listening to what they’ve got up to, taking bookings, taking monies – it’s all positive! So in terms of a trade off yes I spend a bit more time on it – but now the time I spend is positive. It’s fun stuff. I get so excited for the holiday makers as well and I love hearing their recommendations and things they’ve done – and it also means I have more things to discover when I go back.
Now the biggie that you are waiting for – financially was it worth it? The answer is a big resounding YES! The property now earns 44% more as a holiday let than when it was let as a long term rental and the huge benefit for me is that I get to use my home as well! Before when it was let as a long term rental I couldn’t stay there. But now it’s a holiday rental I get to spend a lot of time there, have friends and family there – and I am still financially better off! And amazingly in the first year we have now already recouped the additional monies that we spent upgrading the property to a holiday let.
So I am chuffed – I am thrilled to say my first year in managing my holiday let from thousands of miles away has been a success. I am financially better off and I am emotionally better off – I now have a place in the sun which I can properly call my own – and which I can stay at too!
Graeme
Is thee any agreements needed to be signed for a holiday let?
Sam
we have a booking contract with T&C’s
James Dearsley
Hey Sam,
That is good to hear. I too have a similar story with regard our holiday let.
The main issue is the holiday season and, ultimately, getting the most out of the off season. I believe that is the key to holiday lettings. Anyone should be able to rent theirs out during the peak season.
As a recommendation I found that holiday-rentals.co.uk (part of the homeaway group) was the better one for enquiries and bookings.
I also summarised my findings in a blog ages ago (sorry for the plug but certainly relates to your blog) http://www.jamesdearsley.co.uk/2010/12/how-important-are-holiday-letting-websites-to-your-overseas-property-purchase/
Hope all well Sam,
James
Sam
What an interesting comparison James – you have got me thinking now!! By the way, where is your holiday let and when did you buy it?
James Dearsley
Hey Sam,
I bought in Calabria and bought off plan a couple of years ago. The website is http://www.italianpropertytorent.co.uk.
I currently advertise with both Holidaylettings and holidayrentals and though I prefer the userbility of the former I would say that 70% enquiries have come through the latter. Which is a shame as Kate at HolidayLettings does a great job on the PR front and Social Media.
Holiday lettings has the potential to be very successful if it is managed and marketed in the right way but sadly a lot of people don’t concentrate on it as much as their properties in the UK.
Hope all well with you..
J
Sam
Ah – I didn’t think to use 2 websites (duh!)
I didn’t understand your comment re: “but sadly a lot of people don’t concentrate on it as much as their properties in the UK”
I know from my friend who uses holiday rentals he gets a lot more international enquiries (and people from Spain where his apartment is) than me – mine are mainly UK & Ireland.
Your place looks fab!
James Dearsley
Thanks Sam, really appreciated.
What I meant was that people have different attitudes to holiday lets than they do there rental investments in the UK. I suppose it is partly because it is so far away and they feel that the same rules apply.
Holiday lets is more risky, more logistical and needs more organisation. In return however, I believe, IF it is done properly and the right properties are selected, it has the potential to be very fruitful indeed.
Remember you can always upgrade your advert to bring in other countries for both holiday lettings and holiday rentals. That is what I have done and received a lot of interest from Germany (which I would think is a good market for you?)
However I also get a lot of interest from the US but I think that is an historic link to the region of Calabria rather than the advertising.
J
Sam
James you are right, Germany would be a huge market to us! However, situation now is I am now booked out till Sept so am not sure when the best time of adding another site would be as I cannot fulfil any more bookings!
I am also receiving enquiries from my own site I did (designed on a free platform) http://www.lasfuentes.biz but again as I am full I can’t offer any space to anyone!!
I am thinking when I’m out again this month to see if I can get any other owners on board to maybe start extending my business…???!!
Philip
Hi Sam,
Thanks for the insight on your experience comparing the two types of property investments, lovely place.
I agree that although quality furnishings can initially be an expensive setup cost, they will be appreciated by guests who want modern fresh furnishings. Holiday lets are not a place for offloading 2nd hand furniture.
In my experience, when starting off it’s effective to advertise with 2 or 3 rental portals that have good online exposure for your location. After a couple of years when hopefully repeat bookings are established, the less profitable adverts can be cancelled.
Although holiday rental adverts can seem expensive, the good sites provide good roi when you break down the cost/profit per booking.
Running a holiday let is time consuming, often with low returns. They are also a lifestyle investment and it’s rewarding when guests are happy and return.
A good housekeeper is priceless, but I’m sure you know all this.
Sam
Philip – great advice I had not thought before until James had mentioned to go with 2 sites!! I have only been on one so far. Luckily, we have started to take repeat bookings so that’s great 🙂
To be honest, I don’t find it that time consuming and the time spent is actually fun – it’s rewarding and definitely a “lifestyle” investment as you say.
Good housekeeper is everything!!!
Stuart Nicoll
Have you ever thought of having a 360 tour done of the property? It’s by far the best way to show off what you have and gives the client far more confidence in booking either long or short term.
Sam
That is a very good idea – how do I go about doing that?
Louise Reynolds
Hi Sam
Interesting post. I am on long term rental in Krakow with my apartment. There the short-term rentals are more long weekends, so that would be even harder work.
Useful time analysis. I reckon I spend one to two hours per month on management issues too. Then again I have rent and bills going into and out of my account, which I check each month.
Sam
Thanks Louise – it’s interesting to evaluate the two 🙂
Sam
Wow what a coincidence – tonight I got a trial offer for Holiday Rentals and so have decided having listened to your advice here that I will take them up on it (£35 for 45 days).
Have to admit their site is awful to use. It continually timed out, I lost work, photos and I still cannot update the calendar as it repeatedly tells me in both Spanish and English that the page has expired!
The formatting is awful and having spent hours trying to get it right it still looks wrong 🙁
However, I have persevered – it doesn’t look right, my photos don’t seem to show and my calendar is “expired” but I have paid for it now – and I will listen to you that maybe this experiment will be worth it!!
Philip
Hi Sam,
Looks like the 2 hours a week spent on your holiday let could be increasing, but as you say it’s fun. Hope you sort your holiday-rentals ad out, their support is generally good.
One more to try is owners direct. These three (holidaylettings, holiday-rentals & owners direct) bring in the bookings for us, but what works for one may not work for another.
There is lots of advice available for holiday letting see:
http://blog.schofields.ltd.uk/1036/how-to-holiday-let/
But learning is time consuming – and time isn’t free.
Good luck with the rentals.
Stephanie Colledge
Hi there!
I am just about to embark on purchasing a property that is literally the apartment above the one I currently live in. It’s situated in Leamington Spa, about 5 minutes from Warwick Castle.
I just wanted some other opinions really on whether this would be a good idea to rent out as a holiday let? I’d be gutted if I spent all this money upfront and didn’t get any bookings? Do your other UK based properties tend to do quite well as holiday lets even though they’re not situated say, smack bam on a beachfront in Cornwall?
Sam
Hi, your best bet is to research your local area and talk to agents who do holiday lets there.
holiday home rentals
Congratulations Sam!
Is this cross seasonal? Have you managed to get bookings all year round? I guess its probably easier to do that with the location of the property being in the Canaries!
I run a holiday home rental site and we are busy trying to market it and promote it these past few months. We’ve only been around for a year but hoping to hit the middle tier market and hence are able to offer competetive prices on advertising. At the moment we at the offering 12 months advertising at just £36. in real terms its a bargain and not even a fraction of a weeks rent in most cases. If your interested we would love to have your property on our site and if anyone else is interested please visit us.
Best of luck with the holiday let!
Sam
Thanks. Unfortunately, since I published this article the Canarian govt have now enforced a little known law which means we are no longer able to rent our property to holiday makers. This has affected many private home owners and I think is set to cause further problems in the tourist sector here. I will write a post about it in the future, but I believe it to be a very worrying sign for anybody who owns property in the Canaries.
liz
Yes but have you calculated in Spanish property tax, this is now a big factor , especially in spain, and they are clamping down on rental income in a big way
Sam
Yes, Liz. Tax needs to be paid on any profits.
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