Feedback from owners of foreign holiday property.

[vincentv]

As knock on from discussion on other thread - would be interested in survey from owners of a foreign holiday properties.

NOT interested in an investment property, the "bought an apartment in CapeVerde but never saw it"....not for this thread. More of a lifestyle choice purchase/investment.

Looking for feedback from this type of profile, or a version of:
Bought a holiday home 5/10/20 years ago in France/Spain/Portugal/Italy - holidayed there with family for a few years - now near retirement planning to live there 6 months a year.

Would be interested to hear:

Where/When did you buy property?

How much did it cost? What is property value now?

How did you finance purchase?

How did you choose property?

Did/Do you rent it out when not in use yourself?

Was managing the home through the years a big task?

Were local tax's/rates more expensive than you had predicted?

Did/Do you feel restricted going to same location year after year for holidays?

Did/Do you let family/friends stay in your property?



Overall positive or negative - are you glad looking back you bought the foreign property, would you recommend to someone who is interested in making this lifestyle choice decision/purchase?



Thanks in advance for any feedback.

 

[amtc]

My aunt bought a three bedroom property in Nice some years ago. Her husband had lived for some years in Paris. I've no idea about the financials but we (close family) have all holidayed in it. They made an effort to learn French and go to local markets and shops.

The one thing I would say is that the airline flight times and schedules greatly restricted when they could use it.

 

[Leper]

Where/When did you buy property? Spain, 2004

How much did it cost? What is property value now? Too Much; Too Little. I ain't tellin'

How did you finance purchase? Life Savings

How did you choose property? Observed properties over several holiday years

Did/Do you rent it out when not in use yourself? Yes

Was managing the home through the years a big task? No

Were local tax's/rates more expensive than you had predicted? Yes

Did/Do you feel restricted going to same location year after year for holidays? No

Did/Do you let family/friends stay in your property? Yes

 

[gnf_ireland]

@Leper can I follow up my asking what stage in your life you were at when you bought the property? How far from retirement and what ages were the kids if any? I fully see this as a very good option when kids are in teens or a bit older and person starting to make plans towards retirement, but wondering does it make as much sense 10 or so years before then...

 

[Leper]

I retired this year. Our kids are all married or in relationships. If I may pry:- what are the reasons for your post? Are you thinking of investing abroad? The one question you did not ask:-

If you could turn back the clock would you now buy a holiday home abroad?
The Answer and Read my Lips:- Nooooooooooooooooooooooooooo

 

[DeeKie]

I retired this year. Our kids are all married or in relationships. If I may pry:- what are the reasons for your post? Are you thinking of investing abroad? The one question you did not ask:-

If you could turn back the clock would you now buy a holiday home abroad?
The Answer and Read my Lips:- Nooooooooooooooooooooooooooo

Why no?

 

[Gordon Gekko]

I don’t think I’d buy a home abroad. I already have an overseas property but it’s more of an investment that I’m in the process of exiting. My jaundiced view stems largely from observing my parents, their friends, and my clients. My parents spent quite a bit on their place. The service charges are material, as are the local taxes etc. The investment return that’s foregone on the capital cost of the property plus its carrying costs would buy you some serious long-term lets in nice properties all over the world.

 

[vincentv]

Leper - you missed the last question:
Overall positive or negative - are you glad looking back you bought the foreign property, would you recommend to someone who is interested in making this lifestyle choice decision/purchase?


Looks like a negative for you - can you expand with some details of why no.

 

[Leo]

Leper - you missed the last question:

what are the reasons for your post?

You missed that question...want to expand?

 

[vincentv]

>Leper to OP
What are the reasons for your post? Are you thinking of investing abroad?

Yes I'm thinking about it. Not presently, not in a financial position to pursue it now anyway.
I'm 45 years old, in about 6 years time kids will be finished collage - maybe look into it then, but I'm interested to hear from people who have gone down that road already. And now looking back are they glad or regret what they did.

Reason for starting this thread is follow on from a money makeover thread, on the side we were discussing foreign property and Alistair give an interesting positive summary:

*************
My wife and I purchased a holiday home about 12 years ago. While not particularly cheap to run, it has been the best lifestyle investment we have made. Thanks to Ryanair mainly, it has been possible to "nip" down for long weekends off season and to enjoy multiple visits over the hotter summer months.

Very important to get to know the area before purchasing as you will probably retain the property for 5 years + at a minimum.
Kids and their needs are also a significant factor when purchasing. While adults may be happy to laze and potter about on a regular basis, kids / young adults will get bored and will want to be able to get to the beach or local entertainment area under their own steam.
If you plan to rent out the property in order to have it contribute towards its upkeep, then you will need a reliable English speaking locally based property manager as well as an accountant as you will have to perform a local tax return annually as well as an Irish one net of any locally paid taxes. A foreign property needs to be lived in and used for all kinds of maintenance reasons, so I would recommend you factor in part rental into any decision making. We have also considered rental income as a contribution to local tax obligations and maintenance fund which has worked out well for us.

Our experience of the French property market is that prices are extremely stable and do not tend to fluctuate. Therefore it would be extremely unwise to consider capital growth in the future based on foreign property prices today. While there are many cheap properties to purchase (in France at least), if choosing to rent out a property to short term holiday makers, then you will need to ensure you purchase in a reasonably well known town or beach resort. Holiday homes purchase for little money that are based in remote hamlets or small villages will be far more difficult to rent.

While the affordability of a foreign holiday home was most definitely a factor for us, the economics fade into the background when you are heading for the ferry or arrive at the car rental desk. The freedom and flexibility offered as well as "knowing" the area you are going to (restaurants / bars etc) without having to spend the 1st week or 2 acquainting yourself with a new resort is very rewarding.

Additionally, we find that we can use house swap websites to exchange 2 weeks in our holiday home for two weeks elsewhere and although we've only done this a couple of times, it has worked out great.
*********




Would good to get a few more opinions and see if overall positive or negative wins.....

 

[Gordon Gekko]

I think that Air BnB / long-term lets are transformational.

My own approach (hopefully) will be to undertake long-term lets in different places around the world, but buy somewhere once I get to a point where comfort and ease become the priorities. But, and this will be an important point, sizing/scale are key. Under no circumstances will I tie too much resources into an overseas property.

 

[Leper]

Surprisingly, quite a bit of interest in this thread. I don't know anybody who would not like to own a holiday home in sunnier climes. I bought two, sold one and still have the other. In some of my previous posts regarding purchase of holiday homes abroad, I put down truthful markers as to why not to buy. I based these on the recession period where many like me had large amounts of money tied up in foreign investment seeking to live the dream in future retirement and perhaps make a few bob along the way. Anybody who bought say since 2004 to 2012 is probably still working at a loss from what was the purchase price then to what might be the selling price now. Even foreign real estate agents have been unable to hide the losses their patrons still have on hands. Let's face it, property in Spain will never reach the dizzy heights of price it did back in 2006. I've made up some of the loss through renting out the holiday home, but I never envisaged chasing losses fourteen years ago.

Things have changed a bit, but I never feel quite secure that I could sell anytime or even regain to any great extent the losses. So do you hold on to the property and hope that there will some kind of property boom again in Spain? There is so much coastal property for sale in Spain that that only remains a small hope (probably no hope) in the greater scheme of things.

OK, cut out the facts Lep and put forward the reasons to purchase a holiday home say in Spain.
1. Coastal property prices bottomed out about two years ago with perhaps 5% increase since in property that could be sold. So, if you are buying, now is a good time.
2. Somebody wants to invest in something that probably will never decrease in value, then I reckon a holiday home in Spain is something good to invest in now.
3. We would all like a place to bring the family to where sunshine is guaranteed and the cost of living is cheaper. Coastal Spain is good in this respect.
4. The family that holidays together will stay together - Right? Hmmmmmmmm!

Now for the reasons against:-
1. Brexit.
2. Brexit.
3. Brexit
4. It is not easy maintaining a holiday home abroad. You are at the mercy of Spanish banks. Local Taxes just keep getting dearer and dearer. Maintenance is a problem. Holiday homes must be cleaned, updated. Furniture must be replaced. Airconditioning must be serviced. Utility charges are ongoing. Break ins can be a nightmare. Squatters inhabit Spain too. At the end of five years you are beginning to show some small income. If the Spanish Revenue Commissioners don't get you, the Irish Revenue Commissioners will. That's their job and both are good at what they do. Write down all you spend against income and you will see you are at a bigger loss than you thought you ever would. Just when you thought you could lose no more, you must do a recce trip. Airfares, car rental, transfers cost more now than ever. Suddenly, living the dream can become a living nightmare.

I am only trying to be truthful and prevent some innocent dreamer from gambling at dangerous higher stakes than a compulsive gambler. I should point out that I am one of the lucky ones inasmuch as I have kind of made the whole idea work. The word "lucky" is important here. It could have all gone so wrong.

Gordon Gekko (above) has given some shrewd advice. Why purchase at high stakes when you can rent longterm off season at low stakes? (You can rent a 2 bedroom low-rise apartment centrally located for around €700.00 per month off season). So you spend €700 + Electricity Charge and you are still living a whole month in the off season sun while the landlord pays substantially more on his/her monthly mortgage. Renting you don't have the pain and you can have most of the gain.

Apologies for being so long-winded; I could keep writing on the subject forever.

 

[Alistair]

Where/When did you buy property?
2007 / France

How much did it cost? What is property value now?
EUR 200K + Agents Fee + Taxes

How did you finance purchase?
Remortgaged against property Ireland

How did you choose property?
5+ previous trips to France to various areas of interest always with a view to purchase. Discounted southern France as overpriced, too populous, dependency on air travel routes which change seasonally, higher level of crime and not particularly child friendly.
Eventually discounted Brittany & Normandy due to short sunny season.
Settled on southern Loire on west coast due to microclimate (avg 2,660 sun shine hours per year), clean and extensive beaches, reasonable property prices, < 5 hours from 3 x ferry ports, serviced by multiple airports from Ireland.
Engaged a sales agent, viewed multiple properties. Old and characterful = cold/damp/high maintenance. Chose renovated property with pool.

Did/Do you rent it out when not in use yourself?
No for the first number of years as we used it for significant amounts of time ourselves compliments of parental leave. Having exhausted parental leave allowances, and after 8 or 9 years of our property maintenance person "encouraging" us to rent it out, we have done so for the past 2 years very successfully.

Was managing the home through the years a big task?
In our experience it was important to engage the right maintenance person who also provides a key holder facility. Piece of mind to check the property during winter if it gets a bit blowy. With the right maintenance person there was complete piece of mind for us.

Were local tax's/rates more expensive than you had predicted?
Less than expected to be honest. A pleasant surprise was that our refuse collection (2 x times per week) is included in our local tax payment and in addition we receive a complete breakdown of where the taxes are spent locally which all goes into improving our direct locale.

Did/Do you feel restricted going to same location year after year for holidays?
Nope. We have gone elsewhere just by doing a property exchange. Quick, easy, hassle free.

Did/Do you let family/friends stay in your property?
Yes, we encourage our friends and family to use... prefer to have the property "breathe" when used.

 

[noproblem]

My strong advice to anyone buying a holiday home abroad would be threefold.
1). Ease, certainty and duration of flights.
2). Legal title deeds.
3). Good management of the place.

While the 1st 2 speak for themselves, No 3 is very important and without it you'll have no idea what's happening. On top of all that, you will need pounds shillings and pence. Enjoy and good luck, call that No 4 if you want, you'll need it.

 

[Alistair]

Based on our experience, I think a holiday home is a lifestyle investment, not a speculative financial investment.
Its possible to break even on the mortgage/ maintenance costs if you are prepared to (a) spend enough to purchase the correct property i.e. not cheap and cheerful, buy desirability in the right location (b) engage the right property maintenance person (c) engage the right key holder (d) engage the right holiday letting agency (avoid the "bigger" ones, go independent) (e) advertise wisely (f) meet and establish relationships with local trades people (g) engage a local accountant.

You need to really get to know the area in advance, both on and off season. Research the history of the area i.e. past floodings, intended developments etc. Anything that may adversely impact the value of your property in the future. Also there are cost effective ways to purchase to minimise additional costs. Research is very important. Also, the real estate agent works for you, not the seller so that dynamic is very different to Ireland. You need to get your agent to work for you.

The main difference between long term lets and owning a property is that a holiday home that is owned, becomes a home away from home and allows you the freedom to make it yours rather than stumping up 3 months deposits, scheduling agent inspections periodically, and not having the freedom to make any adjustments to the property (painting etc.). But, to each their own i suppose.

 

[gnf_ireland]

The Answer and Read my Lips:- Nooooooooooooooooooooooooooo

I don't know anybody who would not like to own a holiday home in sunnier climes. I

It is not easy maintaining a holiday home abroad. You are at the mercy of Spanish banks. Local Taxes just keep getting dearer and dearer. Maintenance is a problem. Holiday homes must be cleaned, updated. Furniture must be replaced. Airconditioning must be serviced. Utility charges are ongoing. Break ins can be a nightmare. Squatters inhabit Spain too. At the end of five years you are beginning to show some small income. If the Spanish Revenue Commissioners don't get you, the Irish Revenue Commissioners will. That's their job and both are good at what they do. Write down all you spend against income and you will see you are at a bigger loss than you thought you ever would. Just when you thought you could lose no more, you must do a recce trip. Airfares, car rental, transfers cost more now than ever. Suddenly, living the dream can become a living nightmare.

@Leper I understand the comments above, but was any of the items you listed above really a surprise when you purchased the place? I would be very surprised if you had not researched things like the local taxes, maintenance fees etc, and also understand things needs to be serviced and replaced, the houses need to be cleaned etc. Break In's and squatters are a problem everywhere, and any holiday home has a risk of this as it has a higher level of unoccupancy.

From reading your post, I think the root cause for the negativity towards them is the fall in price rather than anything else. Maybe I am wrong here, but this is what I am reading into it. The other stuff, I would imagine, would have been considered to a reasonable degree before the place was purchased - although may have been higher than expected.

The investment return that’s foregone on the capital cost of the property plus its carrying costs would buy you some serious long-term lets in nice properties all over the world.

My own approach (hopefully) will be to undertake long-term lets in different places around the world, but buy somewhere once I get to a point where comfort and ease become the priorities. But, and this will be an important point, sizing/scale are key.

From a lifestyle point of view, I fully understand the long term lets (during off peak periods) in different places around the world. Of course this makes perfect sense if someone is really into travelling and wants to experience the world. I also fully understand that things change when comfort & ease become a priority - again makes perfect sense.

What I am [personally] interested in is whether it makes any sense to considered one for school going families. My eldest is in Junior Infants and my youngest is starting in September. During the primary school years, the kids have simple enough requirements for holidays - other kids to play with, a pool, access to a beach and as they get a bit older access to water parks etc. The teenage years may be a little bit trickier, but once we get out of those few years, the place could be used by the kids themselves (and their friends), as well as ourselves - who will be in our late 50's at that stage and hopefully able to pop down for long weekends etc, as we gear up to towards retirement.

With school going kids, the discussion on off-peak is not as relevant as we are constrained to school holidays by enlarge (with very few exceptions). All use (and rental) would predominantly be peak usage, where rental would probably be around 1200-1500 a week.

I will look at a hypothetical scenario in the next post and people can crucify it as they see fit

 

[gnf_ireland]

*Numbers are fictional so if unrealistic, please let me know*

Buy a place for around 250,000 on coastal Spain (no clue on costs either I will add) - 75k deposit and mortgage of 175,000 @ 3% [either in Spain or remortgage house here]. Assume opportunity cost of 75k is 1%. Lets say cost of maintaining the property per year is 3k (no idea, so just a guess). That works out at the annual cost associated to the place is 9,000 per year [750+5250+3000]

Lets say you could take in 6k in lettings (after fees) => between June, 4 weeks of the summer (mid July to mid-August), cheap 3 month Sept to Nov and between Christmas and February midterm. Assume this would not incur taxes as costs are higher than this.

This leaves the place free from January (excluding Feb midterm) to start June (over Easter, May mid-term and June BH weekend), and also free for 1st 2 weeks in July and last 2 weeks in August before going back to school.
If we were to use it say - 1 week at Easter, 1 week in May, 2 weeks at start of July and 1 week at the end of August => 5 weeks of peak usage.
The place is then free for use by friends/family not under the school holiday calendar during the non-peak times from January to June - so plenty of time for them to use it and not complain

This would work out at roughly 600 a week in costs for the 5 weeks of usage (9k-6k rental). This would not be bad for peak usage

If we wanted a change of location for a bit, we could always consider a house swap to somewhere else in one of the peak periods. In general kids are happy to go to the same place on the assumption their needs are met there. We keep getting asked when are we going back to Portugal (went to the same place for the last 3 years there)

I appreciate this does not cover the payments made against the capital of the mortgage, but the higher assumption would be this would be an investment into an asset and as @Leper says above, now is not a bad time to purchase in the general cycle of things. Over a longer term, this would be treated as a second home rather than an investment asset. We are lucky enough to have purchased our primary residence in 2011 (at the bottom of the cycle) so have had fantastic capital appreciation in that.

 

[Grizzly]

I have the funds to purchase a property home abroad but decided not to.

This year we will holiday in Portugal, China, Spain, France, Holland, Spain. Leaving out China we will spend about €500 per week on rentals as we will be travelling in the shoulder months. So about €2500 spent on rentals so far.

We are considering two other locations, one for a week and one for two weeks that might increase the spend by about another €1500. Bringing our total spend to €4000. We will stay in rental apartments and hotels.

We fund these holidays from dividend income and interest received.

We have been doing this for about 12 years now visiting different locations/countries in Europe.

Of all the places we have visited there are three locations where we were tempted to purchase. Two locations one in Majorca and one in Ibiza are not serviced by flights during the winter. The other in the Valencia/Alicante region is easier to access. We may take a month in this region this November/December. A front line apartment will cost €1100 for the month.

We have already started planning our 2019 destinations also. These include Austria, Italy, Portugal, Spain.

If we purchased a holiday home I would still have the need to travel to other places. We have thought of purchasing near a Spanish airport and using it as a hub to travel from. If we did purchase it would be in the names of one of our adult children.

We took early retirement. Best thing we ever did. We have seen lots of places. We are at the age where we are hopeful of having another 10 years of similar travel left in us. Maybe as we get older we will need a base to spend the winter and let our children deal with all the maintenance and other issues associated with an overseas property. We will just turn up and relax.

It is still on the cards.

 

[dishwasher]

My dad bought in the first wave of holiday home ownership in the costa Del sol in the early 80s. Not villa but small town house in development of a golf course, 15 mins drive inland from the coast. 5 kids at that stage aged under 12.

Sounds good in theory but every single holiday in this place without air con, in what was effectively an English retirement village, 5 kids squashed into a tiny white fiat rental car to go anywhere. All the kids ended up hating in and Would far rather have spent teenage summers at home.

Also dad felt we'd to stay extra long to get use of the place. I remember one year we were there for 6 weeks in a heatwave 40 degreeswith just our Mum and he went home after 3 weeks to go back to work.

Also very strong memories of dad arguing with complex managers, who were supposedly renting it but money didn't materialise.

Have the fun adventure of going to the Spanish DIY shop in the rental car and then painting the balcony in the searing heat or dad trying to do maintance with no tools with associated cursing and swearing.

Also seeing my mother spending the first 2 days of her holidays sweeping, getting rid of the dust, dealing with laundry and then cooking dinners in a tiny kitchen in the baking heat.

As adults and even with our own families - parents offering us use of the place for free and nobody ever went, so sick of it we were.

As years go on and dad's health deteriorated and then Mum taking him there to try to deal with whatever issues that kept coming up (rent/maintence) and ultimately then them staying in a hotel as just too much work to stay in the place themselves and he couldn't manage the steps.

He died at the end of 2015 and we've had the hell of trying to sell the place and dealing with solicitor, electricity company, estate agent and god know how many other bits of Spanish bureaucracy. Eventually sold about 2 months ago with - get this - 25% in estate agency and solicitors fees.


I'm now 45 and hell would freeze over before I'd buy a holiday home. It's just bliss to have a genuine holiday in somewhere different every year.

 

[gnf_ireland]

We took early retirement. Best thing we ever did. We have seen lots of places. We are at the age where we are hopeful of having another 10 years of similar travel left in us. Maybe as we get older we will need a base to spend the winter and let our children deal with all the maintenance and other issues associated with an overseas property. We will just turn up and relax.

I think this is key and aligns to what @Gordon Gekko is talking about - which as I said makes perfect sense at this stage in life. And I 100% support everything you say above on the 'wandering' lifestyle approach in the early retirement/early years of retirement scenario. The later retirement years are a different story

As I said, I am particularly (and selfishly) interested in people with school going kids who have their needs in mind and are travelling at peak times for the next decade or so