When you invest in a new holiday home, the expenses that go with owning a place that you rarely stay in can be pretty high. If you are not planning on living in your holiday home more than 3 to 4 months a year, then the best way to get an ROI is to buy land that you are can build on. Once your property is built, make sure that you purchase durable or easily repaired furniture. If you take our advice and follow these two pieces of advice, then you will be able to rent your property out via short term lease contracts.

Here are 5 tips on how to make an ROI from you’re a holiday home:

1. Find Land That You Can Build On

Many of the construction companies that operate in tourist areas charge a 50% markup on the places they build. That means you could save yourself a large chunk of cash by going through the extra effort involved with dealing with architectures and regularly flying over to your new build home to check up on progress. Your overall savings should theoretically be around 25% less than had you purchased a property outright. This means if you were to sell the place once it is complete, you should make a decent return.

You also have the convenience of designing a place that is too your specification. You can add a garden, barbeque area, swimming pool, parking, games rooms, and any other perks you think a holiday home should have.

There is a great article from Investopedia on this subject – should you build or buy a home?

2. Rent Your Holiday Home Via Short Term Lease Contracts

Today building a property and selling it for a profit is not the best way to make an ROI out of any new build. Yes, it is the fastest way to make a profit, but there is far more money to be made via short term rentals. If you compare the daily rate someone receives for a yearly rental contract with the daily rate someone using a vacation rental website to rent their property to vacationers, and the difference is often three, four, and even five times more income for the short term lease.

As long as you have a good business mind, then getting bookings should not be a problem. Sign up to as many vacation rental websites where people are searching for short term lease holiday homes, list your property on there for free, and then sit back and wait for inquiries.

Check out this guide about vacation home rental websites.

3. Purchase Durable Furniture

Purchase Durable Furniture

Rather than spending a lot of money on furniture that is super high-end, focus on items that are durable. Remember that you will be renting your place out to holidaymakers. Doing this mean there is potential for accidents to happen. If your furniture is strong or easily repaired, then you will not have the expense of having to continuously upgrade or replace items that are damaged or broken by guests.

You will need to except there is going to be some wear and tear. This would be exactly the same if you were to live in the place full time. You have to accept that accidents do happen, and things will get worn down. For the most part, if guests do break anything, usually there is an option on the vacation rental websites that allow you to send an adjustment or request for payment for times when your guest has agreed to replace the item they broke.

4. Understand The Concept Of Lifecycles

When you are factoring in your pricing and overall cash flow forecast, make sure you include the life cycle of bed sheets, pillows, cutlery, shower heads, iron, ironing boards, and so on. Hotels have to do exactly the same. For example, a hotel with 90 rooms will buy 100 mattresses and plan to replace them within the next 3 to 4 years. The cost of the next 100 mattresses is divided by those 3 or 4 years and each year set aside until the time comes to refresh their mattresses.

When you run a vacation rental property, you also need to know how lifecycles work. You will need to break everything down from long-lasting electronics such as TVs, washing machines, and dishwashers to short term electrical equipment like kettles, coffee makers, irons and so on. Then comes towels, bed sheets, and linens. If you get this wrong, you may end up charging a price that is too cheap and negatively affect your ROI.

See this blog about the phases of a lifecycle of hotel furnishing.

5. Make Sure You Make Your Place Super Comfortable

Make Sure You Make Your Place Super Comfortable

Stay in your vacation rental home for 2 or 3 week holiday with your family. While you are at it put some money aside for purchases you will need to make in order to make your stay more comfortable. If you feel a coffee maker would be an added convenience, then buy one. You will be surprised at just how many things are missing from your original budget. All these extras will make your future guests stay at your place much more pleasurable.

The more your guests enjoy their stay, the better your review is going to be. Now reviews mean a higher rating on the vacation rental home website your place is listed on and it will start to come nearer the top of the list when people are searching for somewhere to stay.

Check out our own blog about how to make kitchens more comfortable by placing the right items on your kitchen countertop.

Summarising Your Journey Into Building a Profitable Holiday Home

Here we covered 5 tips about how to make an ROI out of your holiday home. You do not need to buy land and go for the rigmarole of having your holiday built from fresh, but if you do, the ROI will be much larger than buying a place outright. Renting your place out for short term rentals via vacation home rental websites will help you gain in an income while you are not using your holiday home.

Make sure that if you do rent your place to holidaymakers you understand that your furniture and other items are not going to last as long as they would if no one was using the place. As a result, try to factor in lifecycles of your furniture and other items in the house. Last of all, think of ways to make your place comfortable to stay for guests because your listing on any vacation rental home website will have a section for them to leave a review.

The better your reviews, the more bookings you will get, and the higher the price you can charge. Furthermore, if you have plenty of good reviews the website your listing is on will put your property nearer the top when people search for a holiday home rental in the area your property is listed.