Buying a holiday home: Margo's story

“My wife and I had wanted to buy a holiday home for quite a while. I must have been saying ‘if I win the lottery, I’ll buy holiday homes and live off the rent’ for about a decade. But we didn’t dream of owning a holiday home just for the returns, if any. We love going away together as a family, too, so we were looking for somewhere that belonged to us and was exactly how we wanted.”

“The next question is: where do you want to buy? We were torn between South Limburg and Austria, as they’re both lovely places where we enjoy spending time as a family. In the end, we settled on Austria. We can swim in the lakes or go cycling in summer and have just as much fun skiing and snowboarding in winter, which we often do as a family. Another thing about Austria is the occupancy rate. As tourists also come in winter, you can often rent out a home for the entire year. It’s not quite the same in Limburg, where the tourist season usually starts in spring.”

“Despite all those pull factors, it took some time to commit ourselves to buying. We spent years looking at adverts of gorgeous holiday homes. I’d even listen to podcasts about buying real estate, like the ‘Beleggen en Verhuren’ Podcast. Still, we never actually bought anything. That was until we started talking to the current seller. Within one hour, we decided we’d do it. That was mainly because the sales adviser quickly put our minds at ease.

They explained how the holiday park takes care of the entire rental process: maintaining the property, checking in guests, cleaning after checkout – even helping us to file a VAT return, which is compulsory in Austria. They also make sure the home is rented out when we’re not using it, so that we comply with Austria’s rental obligation on holiday homes. Your holiday home has to be rented out for at least a few weeks a year and be available to tourists. The holiday park takes care of all that for us.

We’re at a busy stage of our lives with work and parenting two young kids, so that support is crucial for us. They were upfront about the costs and gave us a positive estimate of the holiday rental yields in this holiday park. We also wanted to be able to access our home whenever we like. If we couldn’t go there in the summer or Christmas holidays, we’d have said no to buying. I made this investment because it genuinely lets me enjoy life while building wealth.”

“We funded part of the purchase with our own money and part by releasing equity on our home in the Netherlands. We bought our current home about six years ago, and it’s really gone up in value since then. Most big banks no longer offer new mortgages on foreign holiday homes. Foreign banks don’t always offer better conditions either, like lower minimum deposits or lower mortgage rates. That’s why what we did worked well for us.

Still, the interest on this new loan is higher than what it would have been some years ago, so we tried to borrow as little as possible. I first calculated our monthly repayments and then discussed them with an adviser, so that we know exactly how much money we have to spare. Basically, I can pay off this loan even if the holiday home is vacant for the entire year.”

“When I look at the estimated yield, it’s not just the numbers that matter, but the bigger picture. How happy will the home make me? What is its potential? Rental yields on holiday homes are fairly stable, from what I can see. Yes, the pandemic had an impact on travel, but current holiday home occupancy rates are fairly high now. That’s what makes it a lucrative investment. Real estate is a lot less volatile than shares.

Another great thing about this type of investment is that you generate two streams of income. The real estate might increase in value, although holiday homes tend to go up in value more slowly than ordinary homes. And you have the rent, which can be a very lucrative source of extra income.”

“The costs for our holiday home are made up of the mortgage repayments, the holiday park’s service and maintenance fees, plus the ground lease. After factoring in these costs and the estimated occupancy rate, you can expect a 4% to 5% annual yield. That’s the sales adviser’s estimate, at least, and it obviously depends on how often we are in the holiday home.

I’m aware that this estimate might be wrong, but that doesn’t matter. We just love having our own home and the opportunity to rent it out. All that excitement my partner and I feel about it makes us so happy. I’m really intrigued how it will all develop. What challenges will we face? Will we get the occupancy rate we want? I hope to learn some valuable lessons and see how we’d do things differently in the future. It feels like we’re about to go on a journey. If it all goes wrong, we might lose a few thousand euros. We’re lucky enough to be able to take that risk. But if the estimates turn out to be accurate, we’ll be left with a healthy rental income in the long term.”

“My ultimate goal is to use the rental income to repay our loan as quickly as possible. Once that’s done, I might like to buy another holiday home if we can afford to. In the end, I hope to generate some extra passive income alongside what I earn from my job, since I don’t intend to stop working any time soon. That said, I might want to retire early, be less dependent on my income from work or just have the option to do more nice things!

If you’re thinking of buying a holiday home, my advice would be to reach out. Talk to a financial adviser, holiday park or sales adviser. They were able to settle lots of my worries and doubts. We spent a decade looking at holiday homes online, daydreaming while watching property programmes. We could’ve done the same for another ten years. That all changed when we reached out.”

Remember that buying a holiday home or second home involves risk. Discuss your financial situation with one of our advisers before you reach a decision. Make an appointment for whenever it suits you.

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