Holiday Rentals – 3 Sample calculations of return on investment
To achieve a lucrative return on investment (RoI), the location of the property (whether it is an attractive travel destination all year round, attractive to several target groups such as cyclists, beach tourists, etc.) and the interior design play a crucial role. They determine the maximum daily rate that can be charged, and the property’s rental capacity. In the latter regard, the rental agency involved plays an important part. Experience tells us that during the first year, when the property is new to the market, there are not as many lettings as in subsequent years, because good properties have a high rate of repeat guests. Premium properties can achieve letting capacity of up to 75% p.a. The average gross return is generally in the region of 4 to 6 percent over the long term.
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