Holiday Homes: can you have your cake and eat it?

Transcription

1 Holiday Homes: can you have your cake and eat it? John Howell Editor & Founder of Guides Global

2 Agenda A bit about John Howell Why buy a holiday home as an investment? Will a holiday home work as well as a pure investment? Where to buy? What to buy? How often can you use the property? The impact of exchange rates Don t forget safety Three real-life examples Questions Thursday, April 11,

3 John Howell Dealing with international legal and property issues for well over 30 years Background as a Solicitor (English Lawyer). Now retired from practice. Still provides some consultancy services to other law firms and a small number of private clients Guides Global Editor & founder of Guides Global Online written and video guides about how things really work in other countries Writer Author of The Sunday Times Guides to buying a property in Spain, France, Portugal, Italy, Turkey, the USA & various countries in Eastern Europe Author of the Cadogan Guides to Setting up a Business in France & Spain Author of Don t Jump In Author of the two International Law volumes of Butterworths Encyclopaedia a leading textbook for UK lawyers Speaker Speaker about international law and property at events around the world Thursday, April 11,

4 Why buy a holiday home? Lots of different reasons For your personal pleasure with no thought of making any money? As a pure investment? As a holiday home that will also earn you some money? As a holiday home that will help pay its way? All require a different approach We are only looking at the third Thursday, April 11,

5 Will it work as well as a pure investment? Probably not at least if you use it yourself for more than a week or two per year The importance of good property management The importance of good rental management Always expensive The importance of self-help Family, friends, neighbours, workmates Keeping a close eye on your managers Thursday, April 11,

6 Where to buy? Depends upon where you want to have your holidays! Depends when you want your holidays weekends? How much are you prepared to compromise? Some countries generate more rental income than others Some places perform better Some locations perform better than others The importance of travel times Thursday, April 11,

7 What to buy? Properties that take a good photograph Huge impact on lettings Properties that are the right size for their location Properties with the right facilities Properties that are good value Location, Location, Location! Thursday, April 11,

8 How often can you use the property? As much as you like but the more you lose it the less money you will (usually) make Confining your use to out-ofseason The May to September landlord Confining yourself to last minute visits at times when the property is not let Lateral thinking; a cunning plan Thursday, April 11,

9 The impact of exchange rates Ideally, you want to buy in a place where the local currency is likely to go up in value against the pound You generate more income in Sterling terms You get more (in Sterling terms) for the house when you sell it Hard to judge! See for more about this important topic Thursday, April 11,

10 Don t forget about safety! Some countries are WAY more dangerous than others when it comes to investment Political risks Volatile currencies Legal systems that don t work ALWAYS get legal advice when you buy your property From a truly independent lawyer Thursday, April 11,

11 Three real-life examples These are examples of successful, and not so successful, investments from my own personal experience as a lawyer advising thousands of clients There is no one size fits all and what worked for them might not work for you! Thursday, April 11,

12 Marbella, Spain Bought an apartment in a new development in central Marbella on 26 June 1996 for 19,500,000 Pesetas (=EUR 117,000) = 96,000 Value in 2007 (peak pre-crash) about 352,000 Value in 2010 (depth of crash) about 210,000 Value in 2019 about 425,000 = 326,000 = 236% increase in value FTSE 100 on 26 June 1996 was April = 94% increase Rental return on original investment about 6.5% per annum average Holiday taken about 6 weeks per year Thursday, April 11,

13 Yalikavak, Turkey Bought a 3 bedroom villa in a new development in May 2006 for 360,000 Turkish Lira = 150,000 Value in 2008 (peak pre-crash) about 420,000 Turkish Lira Value in 2010 (depth of crash) about 200,000 Turkish Lira Advertised in April 2019 for 545,000 (the currency is so volatile, prices are expressed in Sterling or Euro) but almost certainly heavily negotiable = (on the face of it) 263% increase in value. FTSE 100 on 5 May 2006 was April 2019: 7228 = 19% increase Rental return on original investment about 2.5% per annum average Holiday taken about 4 weeks per year Thursday, April 11,

14 Two centres part 1 A lady who disliked hot summers and skiing bought a twobedroom apartment in a new development in La Alcaidesa (near Gibraltar) in June 2006 for 147,000 = 100,000 Value in 2007 (peak pre-crash) about 160,000 Value in 2010 (depth of crash) about 70,000 Value in 2019 about 195,000 = 168,000 = 68% increase in value Largely as a result of the fall in the value of the Pound against the Euro FTSE 100 in June 2006 was April = 26% increase Rental return on original investment about 6.5% per annum average Holiday taken about 35 weeks per year Thursday, April 11,

15 Two centres part 2 The lady also bought a two-bedroom apartment in a new development in Bansko (a ski resort in Bulgaria) in January 2006 for 52,000 = 35,500 Value in 2007 (peak pre-crash) about 55,000 Value in 2010 (depth of crash) about 20,000 Value in 2019 about 32,000 = 27,500 = 22% loss in value FTSE 100 in June 2006 was April = 26% increase Rental return on original investment about 4.5% per annum average Holiday taken about 12 weeks per year in the summer (when the weather is great for mountain walking and Bansko is a lot less crowded) allowing the property to be fully let during the profitable ski season Thursday, April 11,

16 Two centres part 3 Total investment: 199,000 = 135,500 Value in 2019 about 195,500 = 44% gain in value FTSE 100 in June 2006 was April = 26% increase Rental return: about 5% overall per annum Rental return = an extra pension of about 7,000 per year PLUS she lives in these two properties all year round except when visiting family in England and Australia Thursday, April 11,

17 Questions

18 Contact Details Address: John Howell Guides.Global Ltd 23 Bridewell Lane Bury St Edmunds Suffolk IP33 1RE UK Telephone: From the UK: From Overseas: Thursday, April 11,