Whether you own a business of your own or work at a 9-5 corporate job, finding new areas to invest your leftover funds in is always a good idea. It is a great way to make sure you save up a little extra at the end of the day while generating high monthly returns.
If you haven’t fully decided on what you should spend your surplus on, then perhaps you might be intrigued by the idea of real-estate as a profitable avenue of investment.
Buying your very own holiday home offers quite a lot of benefits. The following are a few reasons why you should consider investing in a second home.
This is a clear advantage when it comes to investing in property. Not only can you turn it into a great holiday stay spot during your vacations, but you can also rent it out over the rest of the year and generate high returns. You can use it as a resort to house your guests and organize social events and family functions too. The point is, it serves dual purposes and offers you an additional benefit that a mere rental property does not.
This is yet another advantage that comes with investing in a real estate property. You can count on there to be a continuous, steady flow of income at regular periods throughout the year. Besides, renting out your holiday home to tenants when you’re not using it allows you to make money without having to make an investment. After all, your holiday home is a second home that just happens to make money for you on the side.
Turning your second home into a short-term rental also makes it easier for you to pay off debts and expenses, some of which may have even been incurred in maintaining the holiday home in the first place. From tax, repairs, insurance etc. there’s so much you can cover without having to make follow-up investments to the property.
In addition to the short-term income, a holiday home can also make a lot of money for you in the long term as well. Since it is a real-estate property, its price will appreciate over time, as long as factors such as location, convenience, connectivity, and comfort are favorable. This means you could sell your property at a much higher price and make a sizeable profit. What makes this such a great prospect is the fact that you won’t even have to do much to make sure the value appreciates. As long as you choose the right location, you can count on natural appreciation to take care of it.
In addition to natural appreciation which is a given, you can push up your property’s market value by making modifications and improvements to the home. This would, in turn, accelerate the appreciation rate by a great margin.
You’re exposed to a lower risk factor when investing in a holiday home compared to other types of real-estate investments. This is because a holiday home is more than likely to be located in a very desirable tourist destination, which guarantees you a high occupancy rate and allows you to charge a higher rental rate.
In the worst-case scenario that the property fails to generate positive cash flow, you can still occupy the second home with your family and wait for the price to appreciate enough for you to sell it. This also saves you the cost of renting hotels or other holiday homes for your family vacations and offers you a way out in case the long-term rental strategy isn’t going well. Either way, the situation is a win-win.
For first-time investors, Another benefit of making such an investment is that it exposes you to the world of real-estate and helps you learn more about making real-estate strategies but in a much more stress-free environment since the stakes are low. There’s no better way to garner experience in the world of real-estate than by actually buying a property and managing it.