Location is key to making your holiday home pay
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 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.
The Templer family from Guildford, Surrey bought an off plan four bedroom townhouse at Sugar Cane Ridge at Royal Westmoreland in the summer of 2009. Caroline Templer says: "We deliberately went for a four bedroom property as it made it possible for two families to rent together and the house was close to the first tee, the Clubhouse, tennis courts and gym, which we thought would be important for potential renters.”
Magistrate Caroline (50), Financial Consultant husband Bill (50) and their two sons found that the villa set up and facilities suited them well as a family. After enjoying many memorable family holidays and golfing breaks in Barbados, they decided to invest in a property. Having looked at several other developments on the island, which were far less established, the family were drawn back to Royal Westmoreland. With Bill being a keen golfer and the whole family into their sport, the onsite world-class golf course and the tennis courts appealed greatly. The security offered within a gated environment was also an important aspect, with the house potentially vacant for parts of the year.
They moved into their home in August 2011 and started renting it out initially to their friends so they could get their feedback. Caroline says: "We are now renting the villa through a villa management company and have made it available over key periods such as Christmas and Easter holidays. We are expecting that the rental income we receive on the property will cover all our costs on an annual basis going forward.”
The villa is available to rent through West Coast Villas.
Photo available from https://www.dropbox.com/sh/xapgmqmgrhhxxuw/WHxOH6OZxT
For Sale – Royal Westmoreland villa offering good rental potential
Completed semi-detached four bedroom town house villa on Sugar Cane Ridge, which is now ready for occupancy. Price $1,225,000 US.
The villa makes an ideal buy-to let residence due to its close proximity to the estate’s extensive amenities including the golf Club House, practice area, Tennis Garden, Rum Shak Bar and Grill and the Sanctuary pools and gym.
Featuring a contemporary interior with an ‘upside down’ design to maximise the panoramic views and cooling breezes, the living and dining areas are situated on the first floor. Large French doors open up the elegant open plan lounge to a covered south facing terrace where the scents of the tropics, and glorious views of the sea, can be enjoyed to the full.
A ground floor master suite with luxury en-suite bathroom boasts a large sitting area, opening to the garden and patio whilst the two ground floor guest rooms link to a generous family bathroom suite.
A fourth en-suite master guest bedroom of equally generous proportions is provided on the mezzanine floor.
The luxurious kitchen features Miele appliances throughout. A duty free furniture package, golf buggy and car is available. We have aligned with Esprit Décor to provide a turn key service to furnishing of the home and establishing your vacation lifestyle..
Outdoors there are additional options of adding a four metre plunge pool and/or sun terrace.
Off plan villas in the same location are also available and prices start from $1,450,000 US.