If you want your holiday fling to turn into something more

Do you know that feeling? Sometimes, on vacation, you get more than just relaxation; you feel like you've arrived, like you're in the right place. Then the desire arises to make this second home your own by purchasing a holiday property.

And thanks to the still low interest rates, financing that romantic Tuscan rustic house, the stately finca in Mallorca, or the cozy holiday cottage on the East Frisian Islands is still affordable. Perhaps you'd even like to use the holiday home as your retirement residence later on?

If, due to work commitments, you can only be on-site for a few weeks a year, renting out the house or apartment is a good option to make the purchase and upkeep of the property more profitable. According to the German Real Estate Association (IVD), a holiday property becomes profitable if it is rented out for 17 weeks a year, because then the income exceeds the costs of the loan, repayments, and maintenance.

In Germany, owners can also claim tax benefits from the tax office. Holiday properties are therefore a good alternative to the expensive domestic real estate market, not only for owner-occupiers but also for investors.

The location is what matters.

The trend of investing in real estate remains strong in Germany. Holiday homes in tourist areas across Europe are becoming increasingly popular. Among the approximately 500,000 Germans who have already purchased a holiday property abroad, Austria and Spain, along with Italy and France, are among the most popular destinations.

With careful property selection and a thorough location analysis, good returns can be achieved with vacation properties. Crucially, in addition to the amenities, the location of the vacation apartment is paramount. The more attractive the surroundings, the better the chances of high occupancy rates and a solid rental yield. Gross rental yields of up to nine percent are possible, of which four to five percent remain after deducting all costs. This is significantly more than can be achieved with a condominium in a good location in a major city.

Properties by the sea or with sea or lake views are of course significantly more expensive, but achieve a higher occupancy rate and also have potential for value appreciation.

Pay attention to the building structure and quality.

Other important criteria for selecting a holiday property are the building's structure and quality. Not only the purchase price of the holiday home, but also the maintenance costs determine whether renting it out is profitable.

To ensure that a holiday fling turns into a long and happy relationship, or perhaps even a marriage for life that the tax office also approves of, it is advisable to consult the local RE/MAX expert.

Because here too, the saying "different countries, different customs" applies: the expertise of a local professional is extremely important. Even within the European Union, each country has different legal requirements, taxes, regulations, and building standards. The partner at the rental location knows the local market and price trends in the desired location and can also advise on financing options when purchasing a holiday property.

Generally, it's advisable to contribute as much equity as possible, especially since banks in Germany apply stricter lending criteria and require more collateral for holiday properties. And the higher the equity stake, the less dependent the property's occupancy rate is on interest and loan repayments.

Sources: manager-magazin.de, handelsblatt.com, immowelt.de, faz.net, drklein.de, expat-news.com, lodgyfy.com