4 Reasons Why Holiday Rentals Are A Great Investment
If you are looking for an investment opportunity to generate high rental income and provide long-term growth potential, you should consider investing in Queensland holiday rentals.
This money-making venture offers several advantages, including tax benefits, property appreciation, dual-use property, and, most importantly, rental income.
In this article, we will discuss why holiday rentals are a great investment and how you can benefit from this type of investment.
What are holiday rentals?
Before going into how good of an investment opportunity holiday rentals are, we need to explain what it’s about.
A holiday rental is a fully furnished property (apartment, house, resort, or complex) that is rented out, often to holidaymakers, for a short time, usually from a day to a few weeks. The privacy offered by a holiday rental is almost unmatched, as there are no crowded hotel lobbies or busy restaurants, just you and your family or friends in your own space.
Holiday rentals have become more popular in recent years.
Vacasa Vacation Rental showed in a search report that holiday rental searches more than doubled year over year.
In 2021, there was a 116% increase in its user base, while searches went up by 235%. If you were still trying to decide whether or not investing in a vacation home will be a great choice, the numbers speak for themselves.
There are also expert tips for first-time home buyers with SoFi.
Benefits of Investing in Holiday Rentals
High Rental Income
One major advantage of investing in a holiday rental is the high rental income.
Holiday rentals have flexible payment plans compared to long-term rentals, which typically have strict monthly payments. As such, holiday rentals earn more in a week than what you can earn in a month with a long-term rent.
A study shows that the average holiday rental produces 130% more income than long-term rent. Though you should note that how much a holiday rental can earn is commonly based on its location, size, and amenities.
This makes owning a holiday home in a choice location highly lucrative, especially in the high season.
The passive flexible income that comes with holiday rentals is great, but it gets better with the appreciation of the property. Real estate is a game that has no loser, and that is because properties appreciate over time, always guaranteeing a high ROI.
With a holiday rental, you have two options.
You can either decide to keep your property and maintain the flow of the constant passive income. Otherwise, you can decide to sell your property if you’re looking to cash out on other investment opportunities. Either way, you won’t be losing out.
Holiday rentals are considered businesses, and qualify for various tax benefits and deductions. Some of these benefits include capital gains tax relief, business rates relief, and mortgage interest tax relief.
Most bills for the holiday rental property are regarded as tax write-offs. These bills include insurance, marketing costs, mortgage interest, maintenance and repair cost, and property management fees.
Property that has the potential to be utilized for both personal and business purposes is referred to as dual-use property.
In the case of vacation rentals, a property owner may utilise the residence for personal purposes, such as getaways or vacations, as well as short-term rentals to other tourists. If the property is in a convenient location and has all the facilities required, the vacation rental can also serve as a retirement residence.
Holiday rental investments may be wise financial moves since they give owners of the property the chance to benefit from capital appreciation as the value of the property may rise over time. Recurring guests and favorable evaluations are attracted to a well-managed vacation rental property, which raises demand and rental income.