Europe has long been a popular vacation destination, with beautiful views of the Swiss Alps and romantic cruises through Venetian canals. Is it any surprise that investors rush to Europe to buy vacation rental properties in destinations like Rome, Paris, Berlin, and Barcelona?
Aside from the exquisite experiences, purchasing European vacation rental homes is a no-brainer. The real estate market in 2022 is booming right now, making it an excellent opportunity to invest. We’re taking a break from the usual cityscapes to bring you the most promising investment possibilities in Europe for 2022.
How do you determine the worth of a vacation rental property in Europe?
Finding the right place to invest in Europe for a U.S. buyer might be difficult. Much of the vocabulary and investment indicators used in real estate do not easily transfer to what works well on the other side of the globe.
When buying a home in the United States, it’s usual to practice outside of Europe to look at the C.A.P. rate and other real estate indicators, but Europe is different. Various factors exist depending on the nation, such as currency, foreign tax, and vacation rental legislation. We divided our evaluation into three primary variables to simplify success and investment.
Demand
In Europe and the whole globe, this is by far the most important component. Vacation rentals are a smart investment for various reasons, but demand is at the top of the list. If there is strong demand in that region, your home will be considerably more likely to be booked than a location unknown to visitors. The demand for vacation rentals may be measured in a variety of ways. Vacancy rates, Airbnb occupancy rates, and average daily rate (A.D.R.) all contribute to determining whether or not a location is popular with tourists.
Seasonality
Many would-be purchasers are enticed to go directly to the beach. While beach vacation rentals are a fantastic business, investors should keep in mind seasonal. You might lose more than your original investment if you’re unprepared for a poor season.
Your vacation property should, ideally, provide regular revenue throughout the year. Destination sites that aren’t weather-dependent and cities with year-round visitors provide a more steady flow of revenue and may be more suitable for novice investors.
Return on Investment (R.O.I.) This is a riskier metric since you won’t know your real R.O.I. until the deed is signed and the home is acquired. There are, fortunately, techniques to assess the value of your investment before making a final choice.
Simply put, your return on investment (R.O.I.) is computed by deducting your returns from your original investment. In reality, it’s difficult to predict how much money you’ll make before you open your doors. You can avoid making impulsive investments if you have a broad concept of how much money you’ll earn.
You may get a rough sense of the raw revenue by listing sites and noting the average price per night in the region for houses comparable to your possible property, then multiplying that by the number of nights on average you expect your property to be booked. When you subtract it from your overhead and investment cost, you may have a clearer idea of whether the investment is worthwhile.
Because these figures are always changing, fluctuating, and difficult to follow, consider using vacation rental software with built-in accounting capabilities to better manage your investment.
Top European vacation rental markets for 2022:
This amazing investment opportunity has never been better situated than it is right now. Right present, vacation rentals in Europe are more popular than ever. A rising vacation rental business has resulted from the convergence of affordable borrowing rates and housing prices during the 2008 crisis recovery and the desire of many visitors to return to travel after the peak of COVID-19.
If you’ve been thinking about investing in a vacation rental in Europe but aren’t sure where to start, we’ve put up a list of the top 10 places to start. We looked at our customer data to determine which areas have picked up and gained pace and compared it to home prices, vacancy rates, and other investment indicators. Which of these 10 cities will you be renting a vacation property in?
1. Shanklin, EnglandÂ
Even though Brexit was a major setback for intercontinental travelers, it resulted in domestic travel for British citizens. Many Brits elect to vacation in their backyard rather than combing through paperwork, new laws, and visas, generating a surge in popularity for seaside communities like Shanklin. This charming English town is situated on the Isle of Wight, which has long been a popular British vacation destination.
The crucial thing to remember is that rental income in England is not taxed at a fixed rate. Instead, taxes are dependent on earned income levels, so if you’re looking to buy a vacation rental that you’ll just rent out once in a while, this may be a great place to start. The lowest tax levels are quite favorable for short-term rental owners, but they grow as your revenue rises.
2. Marseille, FranceÂ
In Marseille, you’ll find the best of French cuisine, architecture, and culture. Because of its excellent summer weather and many cultural attractions, Marseille is a year-round tourist destination.
Any company owner wishing to maintain bookings coming in throughout the year should invest their money into this strategy. Furthermore, there are many marketing possibilities and collaborations with local companies due to the abundance of things to see and do, as well as Michelin-starred restaurants in Marseille.
3. Funchal, PortugalÂ
Funchal, the capital of Madeira and a top surfing destination in Portugal, is a hot property market. Popularity extends beyond the major centers and into tiny communities like Funchal, like a younger brother to some of Madeira’s bigger cities.
Portugal is a popular vacation rental investment destination because of its foreigner-friendly investment legislation and low tax rates. Portugal now gives a ten-year tax-free period to its citizens. This is a fantastic opportunity for novice investors concerned about the hidden fees and taxes that come with buying a vacation home.
4. Gierle, Belgium
Following the epidemic’s peak, many visitors sought vengeance by fleeing the cities and venturing off the beaten path. Many travelers are looking for Girls, which is a hidden gem. Aside from its out-of-the-way appeal, it’s a fantastic investment for a variety of reasons.
Giselle is one of the more cheap Belgian towns, so if you want to buy a Belgian chalet without paying a fortune, here is a great place to start. It’s not far from Antwerp, so you can easily draw travelers from the city for a relaxing weekend.
5. Formentera, Spain
Marseille may be the Mediterranean’s entryway, but Formentera is the Mediterranean. While just a short distance from Ibiza, one of the larger Balearic Islands, this stunning small island remains fully untouched.
Buying a house in Formentera almost completely removes the need to market your vacation home since the island benefits from the same renown as Ibiza but with a more opulent atmosphere. When you buy a vacation house in Formentera, you can expect high-quality visitors and a lot of money.
6. Ballstad, Norway,Â
Adventure seekers should go to Ballstad. Awe-inspiring scenery has made it a household name around the globe. You may expect guests from both the United States and throughout the world. Furthermore, since all the attractiveness is outdoors, you won’t have to worry about interior design or internal facilities (though they are still vital!).
There are advantages to becoming a member of the European Union while also avoiding some of the drawbacks. Travel and tourism agreements between Norway and its neighbors are excellent despite the country’s lack of EU membership. What does this mean exactly? Visitors from the EU are welcome, despite the fact that tax limits imposed by the EU are not strictly enforced.
7. Italy’s SardiniaÂ
Italy as a whole is one of the most well-known tourist attractions globally. Italy is already well-known in the tourist sector, with Rome, Milan, and Venice. Sardinia benefits from secondhand exposure without the drawbacks of big-city tourism, such as overregulation, exorbitant tax rates, and hostile vacation rental rules.
8. Greece’s Crete
Crete enters the list for various reasons, despite not being an up-and-coming discovery. Crete is a good alternative for newbies to the vacation rental investing market, in addition to its natural beauty.
Greece was hit hard by the 2008 property crisis, and the country’s economy is now recovering at a slow pace. Consequently, interest rates, taxes, and property costs in the United States are still cheaper than in Europe. The property market is still getting traction, but demand in Crete is higher than it has ever been.
9. Andorra la Vella, AndorraÂ
Apart from the stunning vistas, most people buy property in Andorra for one main reason: the low taxes. Andorra’s tax structure is particularly advantageous, attracting permanent inhabitants and visitors.
Because Andorra has some of Europe’s most opulent ski resorts, many of its guests are ready to spend. Lodges and ski resorts have incredibly high average daily rates, which means that if you decide to invest, your firm will earn more money.
10. Sylt, GermanyÂ
When you hear the word “Germany,” what images spring to mind? Spectacular cathedrals ancient breweries, or meandering brick roads? The beach comes to mind for many residents and visitors from surrounding nations! Sylt is one of Germany’s greatest natural retreats and one of the country’s few islands.
The island of Sylt is home to some of Germany’s most costly properties, and it’s easy to see why. Sylt draws luxury travelers with its high-end facilities like gourmet restaurants and spa centers, in addition to its stunning surroundings. Sylt is the German Hamptons, so if you’re seeking to break into the world of a luxury vacation, here is the place to go.
Takeaways
Consider one of these top ten vacation rental locations in Europe is high on your wish list for a vacation rental investment. You’ll discover that any one of these 10 cities can bring you some high vacation rental income if you strike a balance between a gorgeous location and a competitive price.
When you decide to invest in a vacation rental property in Europe, you’ll need software to manage your operations. Manage your reservations, connect with major OTAs like Airbnb and Vrbo, and establish your website from one simple location. The initial stage is to purchase the property, followed by installing Lodgable’s cutting-edge vacation rental software.
