Investing in recreational real estate

More and more investors are choosing to invest in recreational real estate. It can be very attractive to buy a second home in a tourist area. This is partly because the mortgage interest can be deducted from taxes and the house can be rented out for a lot of money. There are great prospects, especially in countries such as Thailand and Turkey. At the same time, there are also risks when buying a second home. Read all about it in this article. More and more investors are investing their money in recreational real estate. This is because after the credit crisis they started looking for alternative ways to invest their money. The credit crisis was caused by the collapse of the American housing market. Many homeowners were no longer able to pay off their mortgages. As a result, many banks got into trouble and had to be kept afloat by the various governments. Other banks went bankrupt. Stock prices worldwide plummeted. This happened again during the Euro crisis. Many investors therefore lost confidence in regular forms of investing and started looking around for alternatives.

Buy a second home

More and more investors are investing their money in, among other things, a second holiday home. There are several reasons why this can be a very attractive form of investing. First of all, it is very advantageous to take out a mortgage, because in that case someone can deduct the interest from the tax. As a result, someone makes a profit on a loan. A second reason is that the house can be rented out easily and at a good price when the owner is not using it himself. During holiday times the house can be rented out for a very good amount. At the same time, money can ultimately be earned from the sale of the house. In addition to these financial benefits, savings can also be made at the holiday location. Owning your own home can save a lot of money on accommodation costs during the holiday.

Investing in recreational real estate

A lot of money can also be made by choosing where to purchase the home. Sometimes it can be predicted reasonably in advance that a home will increase in value in the future. This is because governments often make their policies for a particular area years in advance. If a certain area has been designated as a tourist area, it can often be attractive to invest in it. In the past, for example, France, Spain and Belgium were very attractive markets for investing. Certainly regions such as Costa del Sol or Ibiza where many visitors came were interesting investments. In the meantime, the market there is quite saturated and investors have to look for new regions. Good countries where it may be interesting to invest are Thailand and Turkey. A new tourist industry has emerged there in recent decades and will probably continue to grow in the future.

Risks of investing in recreational real estate

At the same time, it is also good to be aware of the risks. Sometimes a holiday area can suddenly become less attractive, for example due to a natural disaster or political crisis. A good example of this is the Arab Spring, which caused tourism in Egypt to plummet. Something else that can throw a spanner in the works in an economic crisis. For example, due to the credit crisis, many people opted for a holiday closer to home. For example, the economy in Greece collapsed. This also had consequences for house prices. This fell sharply. It is therefore wise to prepare yourself well, but there may be unforeseeable circumstances that are very difficult to predict.