Things to Consider When Renting Out Your Holiday Home

Things To Consider When Renting Out Your Holiday Home

If you're lucky enough to own a holiday home, you'll benefit from some amazing, relaxing breaks every year with friends and family in the comfort of a property you own — it'll be decorated and furnished to your tastes, with all the amenities you and your guests could want. 

However, any home other than your main one is likely to be vacant for most of the year. If you are someone who owns a second home or is considering investing in one, you may be in a position where you could use your second home as a source of income through holiday renting.

There are many things to keep in mind if you are still deciding whether to rent out your second home, but once you do, the next steps are easier! 

Using this guide can help you make the most of renting out your second home as holiday accommodation. Here are some items to check off your list:

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1. How to Make a Profit

Keep track of your holiday home expenses like air conditioning, water use, and the electricity you paid for while you were residing in your second home. This will help you decide how much to charge guests.

The price you charge should include utility costs for their stay, and then some! Factor in covering your mortgage, additional amenities, and maintenance costs. Anything beyond breaking even will be extra cash in your pocket. So, to increase your chances, be sure to factor in your home's upkeep when calculating your listing price. Of course, if you are an owner with Bachcare, we take care of your nightly rates setting and revenue management for you.

You must also factor in tax costs — any money you make from holiday rentals in New Zealand must be declared. However, you can also claim expenses related to the running of the business. Find out more here!

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2. Decide on Added Charges and Fees  

There are usually two kinds or charges and fees added to holiday rental listings: a deposit and a cleaning fee.

Chances are you're going to hire someone to clean your home after your guests leave . or you may choose to clean the home yourself if it's convenient for you to do so. Either way, you need to include a cleaning fee to cover some of your holiday home expenses.

While some homeowners prefer to include the cleaning fee within the overall cost, others like to list it separately. There are many factors that go into the maintenance and cleaning of a second home, especially one that is being used by travelers and families.

You can expect that there will be some amount of wear and tear that results from holiday stays, from the furniture to the kitchen appliances or carpeting. You also need to consider costs like broken crockery and washing bed linens. Many owners charge a returnable deposit to cover the cost of damages. If no damages occur during the stay, the guests get their deposit back.

Owners with Bachcare need not worry about charging for cleaning and additional fees as it’s all calculated at the online checkout for guests. Our local Holiday Managers take care of cleaning the property, and our support office sorts out any damage claims which may occur during stay. Which all equates to less stress for you!

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3. Hire a Cleaning Service

Investing in a quality cleaning service to tidy up after each guest stays in your holiday home is ideal for a few reasons: 

• It will ensure that each renter arrives at a clean house. 
• A clean home will improve their overall experience (hence a better review).
• Hiring a cleaning service means you don't have to do it yourself.

The biggest benefit from having a squeaky-clean home is that guests are more likely to leave good reviews. This then inspires others to book your holiday home, generating more bookings for you. It's a win-win! 

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4. Keep it Seasonal

You need to keep in mind that the pricing and fees need to change depending on the season. This can be the difference between profit and loss. 

If you are renting during the summer holiday season and your home is in a predominantly summer holiday spot, your rental fees can be higher than what you would charge in the winter. There is a much higher demand for vacation stays in the summer, meaning renters will pay higher nightly rates. Likewise, in ski destinations, setting a higher price during the ski season can earn you premium bookings. On the flipside, setting lower rates in the off-season will encourage holidaymakers to stay with you, ensuring you're making rent all year round. 

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5. Finding the Perfect Holiday Home to Buy and Rent

Purchasing a second home is a large investment, and it's important to take all factors into account. Do as much homework as you can to find the right area and right property type. 

Once you decide to invest in a holiday home, besides it being the perfect property for your family vacation, here are a few more things to think about:

Location, location, location

Location is the number one factor to consider. If purely for investment purposes, you need to think about where people like to go on holiday. If you are also going to be using the home, it’s a no-brainer that you need to choose somewhere you enjoy visiting! 

Remember, the popularity of an area will change over time. Suppose you can choose an area that may not be popular today but is up-and-coming and will be very popular in a few years. In that case, you'll be able to buy a home for a low price and then rent it to travelers in a few years at a higher rate!

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Consider When Renters Will Be There

When a renter is staying at your holiday home, you won't be able to use it. There are popular times of the year when your second home will be in higher demand among travelers depending on location.

So, when you choose to invest in a second home, think about the time of year when you and your family want to use it. That way you can buy a property that will be most lucrative when you're not there.

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Rental Income vs. Mortgage Costs

You'll probably have a mortgage on your second home, but regardless of how you choose to finance it, you should calculate whether the costs of renting out the home will cover your annual holiday home expenses. 

Your mortgage repayments are important considerations when deciding what you will charge in rental fees. 

For second homeowners and future holiday home investors, holiday renting is the perfect solution for offsetting the costs of your home throughout the year. If you choose this path, following some of these tips and considerations is a good place to start!

Want to find out more about how Bachcare makes holiday home rentals stress-free? Request your free information pack today.

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