Often people try to combine two goals of buying real estate into one, buying an object at the resort, which should also be a good investment. Usually the idea is to rent out housing during those periods when the owners themselves are not there, and it is empty.
Such versatility may seem tempting, but it's not that simple, and there are good reasons to separate investments and assets for your own use. They are mentioned in the publication of the Asian edition of Invest Asian.
Large cities or resort towns?
The criteria for choosing an investment property do not necessarily coincide with the parameters that are a priority for your lifestyle. That is, the best places to make money are most likely not where you personally like to spend time. A simple example: buying an apartment in a seaside resort may seem attractive at first glance, but at the same time in large cities – business centers, housing is almost always easier to rent, and rental income is higher.
For example, if an investor had bought a resort apartment in Pattaya ten years ago, he probably would not have made a big profit. At the same time, real estate prices in the Thai capital Bangkok have doubled during this time.
Large cities with a high population density have many jobs, better schools, airports, and more developed transport links. Of course, there are exceptions. For example, in China or Myanmar, along with the capitals, there are other equally large megacities that are also financial centers.
But, as a rule, the administrative, business, and cultural life of the state is concentrated in the capital, which means that it is more predictable for investors.
Read our latest reviews of the real estate markets of European capitals: Ankara, Nicosia.
Beaches and mountains may lose popularity or have a pronounced seasonality. If a place is attractive to tourists now, this does not mean that in a few years it will not be eclipsed by a new resort star. Remember: there are thousands of kilometers of the cleanest beaches in the world! It is possible that any of the countless undeveloped islands of the world could become the "next Bali" by 2050.
Or take, for example, a pandemic. Many travel companies have lost money due to the reduction in the number of vacationers. The business relied on the influx of tourists, which can be unstable, especially under the influence of external factors. Tourists come and go, but locals and immigrants who settled in the country remain. Invest where there is a healthy demand from local tenants and resident foreigners. Thus, you will not suffer from the ups and downs of the tourism sector.
More to the question of whether personal preferences coincide with the requirements of the rental market. Let's say you have a large family and you buy a spacious house or apartment. But it is well known that smaller apartments are easier to find their tenant and have higher profitability and profitability. Although we will make a reservation - it all depends on the country and place of purchase of real estate.
To summarize, the ideal solution would be to purchase different objects for different purposes.
How to manage your investment property?
If you rent out your "second" property during your absence, you will have to manage the property and deal with tenants. If you live nearby, it's relatively easy to manage these issues. But, if you are physically in another city or country and rarely visit your property, everything becomes more complicated. In this case, you will need to pay someone from the local for cleaning and maintenance of the apartment or invite someone who will manage the facility on your behalf. It is necessary to take into account possible difficult moments: checking and evicting tenants, consideration of their complaints, repair and replacement of equipment or furniture if necessary.
If you do not live near the investment object, calculate your costs for solving possible problems and agree with someone you trust and who will be able to resolve issues on your behalf.
It is also important to remember about the regulatory framework of the place where your house or apartment is located. For example, not all homeowner communities and condominiums allow short-term rentals.
It is no secret that tenants often damage property, and there are cases when they do not even report the damage caused. These risks must be taken into account when planning. Owning real estate costs a lot of money. But remember: renting it out can cost even more if you don't have permanent tenants!
In order to reduce possible troubles, it is recommended not to leave valuables in the house for rent, not to equip it with too expensive appliances and furniture. But in this case, your own stay in the apartment will not be so comfortable.
Thus, before making a purchase of real estate, it is necessary to clearly formulate your goal and not try to "kill two birds with one stone".
Professional advice about how to prepare your real estate, including resort, for rental, are collected in our separate material.
Source: Invest Asian
The material was prepared by: Elizaveta Barskikh
