For many families, investing in a holiday home is a dream scenario. A chance to own a second property overseas is not only a chance to have a base in your favorite holiday resort, it’s a chance to enjoy an income when you are back in the States for work. Whether you have been saving for some time, or perhaps you have inherited some money from a family member, there are plenty of pros and cons to weigh up first before deciding whether a holiday home meets your needs.
Pros of buying a holiday home in Europe
- The exchange rate is strong at present
Now is a good time for US-based investors to acquire a second home in Europe. That’s because the Euro has strengthened in recent months against the dollar, giving you more value for money in the European real estate market. The EUR/USD forex pair is one of the most liquid in the world, with billions of dollars flowing through the market daily. Although, it’s best to keep an eye on the fluctuations in the market, to ensure you get the best deal.
- Well-situated properties may be easy to rent out when you aren’t there
If you decide to own a holiday home, it’s possible that you could rent out the property during the weeks or months that you don’t stay there. You could employ a local property agent to manage the lettings on your behalf when you are the other side of the Atlantic. The additional income is obviously beneficial and could even be used to fund your next flights back to your holiday home.
- Your very own year-round holiday destination
The beauty of owning a holiday home is that you have a ready-made holiday destination that’s ready and waiting for you whenever you want to take a “time out”. There are no hours wasted flicking through tour operator websites or brochures, you simply book your flights and start counting down the days.
Cons of buying a holiday home in Europe
- Avoid buying somewhere that’s expensive to travel to
One prohibitive aspect of owning a holiday home in Europe is the cost of traveling there. If you choose a holiday home in a remote location in Europe – one that few US airports fly to, you could be paying huge sums to travel to your holiday home each time. Be savvy and choose a resort that offers cheap cost of living and travel – it will repay you in spades.
- Managing multiple mortgages can be tricky
If you already have a mortgage on a property in the US, taking on a second mortgage will be a big decision to make. Ideally, you will find a property that’s valued low enough to allow you to make a big down payment to lower your monthly bills.
- You are solely responsible for the property’s upkeep
With most holiday apartments, you will only pay a modest deposit on arrival to cover the cost of cleaning and repairs after your stay. When you own a holiday home, you will be responsible for everything. It doesn’t matter whether it’s structural, electrical, or aesthetic. You’ll need to have a contingency fund stashed away in case of emergency repairs.
Hopefully, by the time you have read this article, you will have a better idea of what you want from a holiday home and whether it is financially viable for you. Weigh up the costs of owning, running, and maintaining the property against the pleasure your family will get from having a dedicated holiday destination that’s available all year round.