Short Term Holiday lets in Spain have the potential for high income with well-chosen properties in good locations achieving a better return on your investment than long term letting. The issues you must address in order to maximise income are: o Unlike Long Term Lets, where you only need to actively market your property when a tenant vacates the property – normally once every year or two – Short Term Letting you must continually market your property – remember you will need a new customer for every week (or two) in the year. o You must have an advertising plan – newspapers, magazines, the Internet, or just use your Letting Agent do the advertising. We strongly advise you to use all avenues available to you. o You will need a Letting Agent to organise client entry, deposits, full payment, cleaning and any other the day-to-day issues. o The Letting Agent must be local to your property and have a good track-record of short term letting. o The percentage payable to the Letting Agent ranges from 15% to 40% depending on the services they offer. Remember, short-term letting requires more work than long term so you pay more for this service. In general, the more you pay the more advertising you should expect. At the top end of the scale the agent will offer a full package including active marketing of your property in UK newspapers, brochures and the Internet. o The most cost effective approach is market your property yourself and use a good quality Short-Term Agent for property management etc. o Furnish your property well, using robust, clean equipment and good quality furniture. Keep in mind that short term let customers may not treat your furniture as well as you would. o Ensure that a breakage deposit is taken by your letting agent and only refunded once the agent has checked for breakages and stolen items. Short Term Holiday Let Locations As with Long-term letting the most important factor in the level of returns is the Location of the property. However, unlike long-term lets where the property should be in a good commuter location, holiday lets must be in a good holiday location. The best approach is to put yourself in the position of a potential holidaymaker. The most important factor to take into account is year-round occupancy. The ideal location will have features that attract holidaymakers for the entire year – not just the summer. Checklist: o Beach, walking distance to the beach carries a large premium o Swimming Pool o Local shops and restaurants o Activities for children o Activities for adults o Snow Ski resorts nearby o Within 1 hour taxi ride from the local airport Golf Golf courses within a short drive of your property can dramatically increase the occupancy rates. As an example, the low season for golf in the South of Spain is the Summer (too hot to play) and the high season is the Autumn and Spring. This has the effect of prolonging the high season. Areas around Marbella (where there are over 50 golf courses) attract a large number of golfers, many of which are prepared to pay a premium to stay in a nice location with high quality furnishings.…
Rising mortgage interest rates affect the real estate market in many ways. Both buyers and sellers will usually benefit from lower interest rates, and higher interest rates will usually only be beneficial to banks and other lending institutions. The fluidity of the real estate market is greatly increased during times of low interest, and thus low interest rates represent the best opportunities overall. However, that is not to say that an intelligent real estate agent cannot capitalize on times of high interest. Buyers may feel pressure to purchase before interest rates increase further, and sellers may want to sell before buyers are priced out of the market.
Buyers Feel They Can Afford Less
As mortgage interest rates increase, the amount of home a buyer can afford decreases. This change is often substantial; a single percentage point increase in a mortgage interest rate can lead to a buyer losing tens of thousands of dollars towards their potential home. Ultimately, sellers will see this mortgage interest rate cutting into their own profits, as they will need to lower the price on their homes to sell them at all. Buyers will need to be encouraged to act quickly to secure their homes.
Buyers are Less Motivated Overall
When mortgage interest rates are low, many buyers are pushed into the market out of a desire to get a good deal. Some buyers may purchase homes before they intended to simply to secure a good rate, while other buyers may find previously unaffordable homes suddenly attainable. When mortgage interest rates are high, this sense of urgency dissipates and the market as a whole stagnates. Real estate professionals may need to get creative when working with these less motivated buyers.
Property Values Slide Downwards
Unmotivated and unqualified buyers ultimately lead to property values going down. Even in remarkably stable markets, you will usually find that the volume of sales will decrease even if the value isn’t substantially altered. Unfortunately, this in itself drives the property values down even further as buyers will avoid purchasing homes when they feel the market is faltering. This will lead to a weak market with less activity, but could also lead to lower mortgage interest rates as banks attempt to encourage buyers to purchase again.
To avoid both stagnation and volatility, the real estate market needs to maintain a certain financial equilibrium. Property value cannot go up or down too fast, and mortgage interest rates can neither rise nor fall dramatically; when either of these factors change suddenly, real estate agents need to act fast and remain in control.…