- Investing with a high rate of return
- Return through rental
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Renting out a holiday home with a high return
You purchased a holiday home at Marina Resort Leukermeer, you want to rent it out, and you are curious about the potential return. For all houses, no fixed or guaranteed return is given when purchasing. There are, however, several return forecasts in which you can see what the return is expected to be. So you can certainly make a good return on your holiday home, but not a guaranteed or fixed one. We will explain why this is the case below.
You may have seen it somewhere: "a guaranteed return of 6% on your holiday home". But what does this mean, and what are the advantages and disadvantages? We will list these for you.
Holiday home and its return
When you invest in a holiday home, you do so with the intention of making money. The money that is earned on your investment is called a return. Mind you, the return is the money that is earned, so it is calculated AFTER deducting the costs. When we talk about the costs of a holiday home you can think of things like the payment to the rental organization, the park contribution, the insurance costs—such as home insurance and glass insurance—but also possibly the costs for financing the purchase. These costs are offset by the rental income. This rental income is the revenue that arises from the rent paid to use the dwelling. The difference between the income and the costs can be expressed as a percentage of the investment: the return.
A mathematical example:
|Investment in the property||€100.000,-|
|Costs on an annual basis||€9.000,-|
|Revenue on an annual basis||€15.000,-|
Please note that this is merely an example from which no rights can be derived.
Holiday home with a guaranteed return
When you purchase a holiday home with a guaranteed return, you get the guarantee that the rental of your property will yield a fixed amount each year. A return of 6% sounds very attractive, especially with a savings interest that is almost 0 or even negative. However, you should keep in mind that there may be a catch. Here are a few explanations.
Your home must be available for rent all year round, so you can't use it yourself.
On many holiday resorts, you have the option to use your property yourself, rent it out completely, or have a combination of personal use and rental. In the case of a guaranteed return, the party giving the guarantee wants to minimize the risk of having to put in its own money to make up for not meeting the guaranteed amount. Therefore, your holiday home should be available all year round so that it can be rented out as often as possible.
The guaranteed return is always for a limited number of years. The higher the percentage, the shorter the period on which the guarantee can be given.
The guarantee is often valid for a period of 3 to 5 years. What the return will be after this period is not known in advance. Please keep in mind that when houses with a guaranteed return are sold in the holiday resort, said houses will be given priority status and your house (of which the guarantee has expired) will only be rented out last. This can mean a serious drop in your return.
Your home should generate as much money as possible in a short period of time. But, due to the very high occupancy rate, your property is more likely to suffer from wear and tear on the interior.
The more often something's in use, the more wear and tear there is. This is true for nearly all things in this world. A holiday home that is used 365 days a year therefore sees more wear and tear than a home that is used less intensively. This extra wear and tear will cause your interior package to need to be replaced sooner, which will be at the expense of your income and therefore your return. A higher occupancy will not necessarily give you a higher return.
Many holiday parks offer you the opportunity to use your accommodation yourself, to rent it out fully, or to create a combination of private use and rental purposes. In case of a yield guarantee, the party that provides the guarantee wants to minimize their risk of having to pay the difference with their own money. This means that your holiday home must be available all year, to ensure that it can be rented out as often as possible.
Often, the guarantee is for a period of three or five years. What the yield will be after this period is not known in advance. Please keep in mind that while accommodations with a yield guarantee are still being sold at the holiday park, these accommodations get priority and your accommodation (of which the guarantee has expired) will be rented out last. This may cause a serious decrease in your yields.
The more something is used, the more wear it suffers. This goes for practically everything in this world. A holiday accommodation used 365 days per year will therefore suffer more wear than an accommodation which is used less intensively. This extra wear will result in your interior package needing replacement sooner, which will eat into your revenue and therefore your yield. Higher occupancy does not provide you with more returns.
Holiday home with a guaranteed return
Purchasing a holiday home with a guaranteed return seems better than it really is. Naturally, investing in a holiday home with the intention of renting it out and making a return on your investment is a good idea. However, it is important that you have real expectations of the actual return that you might expect. Decent information and insight into the fixed costs are therefore essential.
Marina Resort Leukermeer is a unique and very popular location where many water sports enthusiasts spend their holidays. The demand for accommodation for short or longer holidays is very high and is only increasing. The wide variety of types of accommodation - from 2 to 16 people - means that both couples and large families will find their way to Marina Resort Leukermeer. As a result, the rentability of the holiday homes is high, as is the expected return.
For Marina Resort Leukermeer there is no fixed return or even a guaranteed return. However, there is a good expected return.
Would you like to know what the possibilities are for investing in a holiday home at Marina Resort Leukermeer? Feel free to plan a meeting with our advisers. They can tell you all about the various possibilities and can guide you through the purchase process.