Want to buy a holiday home? Five questions to ask yourself first

Buying a holiday home can seem pleasant and glamorous, and Italy seems the place to do it! But you have to put your imagination aside to make sure you have thought it out. It is a good idea to consider the expenses, for example taxes and maintenance. Then, it is necessary to evaluate whether you want to make use of it as an investment or not. So let's have a look at five questions to ask yourself before buying a holiday home.

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Why do you want a holiday home?

Before looking for a holiday home to buy, first consider the reasons why you want to buy it, and the goals you want to achieve. Do you want to use it for yourself or as an investment? If it's for yourself, how will you use it? According to Steve Schwab, founder of Casago, a property and holiday rental management company, the most common reasons for buying a holiday home are: having a home in your favorite holiday destination; having a place to hole up; renting it out or using it as an investment; or selling it to make a profit. “Some of these goals can collide and be difficult to manage,” he says. Experts advise putting your emotions sense of ownership aside if your goal is to make money. “It's a business”, they specify.

Do you have time to manage the house if you decide to rent it?

Many homeowners underestimate the time and work involved when renting a holiday home. “Some who bought a second home found they didn't do it to go on vacation, but bought a new job,” says Schwab. He estimates that owners spend around seven hours a week managing a holiday home. Also, if you're self-managing a property that means being available 24 hours a day, 7 days a week, in case tenants have any questions or problems.

Will you manage the lease or hire a company?

There are people who have the time to manage renting a house, the knowhow to avoid headaches, and who even enjoy it. For those who live some distance away though, it is best to hire an administrator. Schwab suggests that “a good profitability calculation goes through recording how many hours per week you run the house and how you might cut these hours given the administrator's fees. This can help owners determine if a management service is worth it." Additionally, owners who use the home for personal use but don't go there often can hire an administrator to monitor the home in their absence.

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Do you want short or long term tenants?

Renting the house on Airbnb or Rentalia might be the most profitable option, but it also has drawbacks. You have to include cleaning costs, home furnishings and consider that in the low season the influx of people could be reduced. And not every property is well suited to short term renting. The other option is long-term rent. In this case, daily management is not necessary, but it is necessary to evaluate whether you want to use the house yourself or not. Schwab says the longer rent "limits how often you might enjoy the home if a tenant signs a six-month or one-year lease."

How much does it cost to maintain this house?

Like a main residence, a holiday home will come with a mortgage, taxes and insurance. In addition, there will likely be additional costs for maintenance, repairs, utilities and other specific charges. If you want to use the home for yourself then you can try to save money, but “converting the holiday home into a short-term rental involves even greater costs. It is important to understand that vacation rentals have a higher operating cost than traditional homes,”says Schwab. "The cost of normal wear and tear in vacation rentals is disproportionately higher than that of long-term rentals due to the high turnover of people who come and go constantly."

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