Property investment > investment
Many people assume that overseas property investment must mean holiday homes, where rental income is mainly generated during the traditional holiday seasons through a series of short lets to tourists. As a result of this view, British investors tend to compete fiercely over properties located close to airports, beaches and golf courses.
While these properties can undoubtedly generate solid returns, especially in counties with a strong tourist industry such as France, the alternative and much overlooked route into overseas property investment is to let to local people for longer residential periods. Assets say that not only is this usually more reliable but it is also a much more 'hands-off' investment, requiring less management input.
Local lets are usually considerably less hassle for the investor because one tenant will normally last for a year, two, or perhaps even longer. Holiday lets, by contrast, tend to be very short-term, changing every 1 – 2 weeks at high cost to the owner. What's more, holiday lets often have long empty periods during low season
| |
Self Managed Holiday Let |
Fully Managed Local Let |
France |
7% yield but 25% cost of management - net yield of 5.25% with daily work management for enquiries |
Fully managed hands off investment - net yield of 5% |
Cyprus |
8% yield but with 25% cost of management - net yield of 6% |
Fully managed hands off investment - net yield of 7% |
|
Property in city centers such as Saint-Brieuc in Brittany and Montpellier in the Languedoc in France, or Chloraka in Cyprus, is usually less expensive than in tourist hotspots like Paphos, meaning investors can access better quality property at lower prices.
Stuart Law, Managing Director of Assets commented:
“Amateur investors in particular are driven by the desire to holiday in their overseas property once or twice a year, therefore focus on holiday destinations which they might ultimately choose to retire to. However, with the time taken to manage the holiday bookings and the hassle of arranging changeover/cleans between holiday let clients, it would make sense financially to consider separating the investment from any intentions for personal use and seek local let property.” |
