Buying a home for tourist use

Tourist rentals are booming, there’s no doubt about it. That’s why many people are considering buying a home for tourist use as a great business idea.

What is a tourist apartment?

A tourist home is a category of accommodation according to each regional vacation rental regulation in Spain.

This is a property intended to provide short-term accommodation services, for days or weeks, as opposed to traditional long-term rentals.

For tax purposes, they are considered non-hotel tourist accommodation.

They are located in tourist areas, either in the center of a city or at a place of interest, making them a very attractive option for those looking for a more authentic and flexible travel experience.

They are usually fully furnished apartments that include all the necessary amenities.

Why buy a home for tourist use?

Buying a home for tourist use can be a good option to generate income, especially if it is located in a highly touristic area.

It serves to obtain attractive income and is a good form of investment.

Advantages and disadvantages of buying a tourist apartment

Like any investment operation, it has positive and negative aspects.

Advantages of investing in tourist housing

The advantages of buying a home for tourist use are:

Profitability. The main reason most people decide to buy a vacation apartment is to earn a profit. Since it’s rented out for short periods to different people, it generates a steady stream of income that often exceeds that obtained with traditional rentals. Furthermore, prices are usually higher in popular tourist destinations and during peak seasons, further increasing profitability.
Low time investment. There are tools that offer innovative solutions to automate and streamline the check-in process, providing significant advantages to owners and saving time on these types of tasks.
Revenue Maximization. Platforms for offering vacation apartments have revolutionized this type of rental, allowing owners to manage their reservations and optimize their income.
Operational efficiency. Technology can improve the ability to provide exceptional service, resulting in greater customer satisfaction and better reviews, making the property more rentable.

Disadvantages of investing in tourist housing

The disadvantages of buying a home for tourist use are:

Taxes. Taxation of tourist apartments varies by location and by country or region’s tax laws. Additionally, in some places, income generated from the rental of tourist apartments is subject to taxes, which may include income tax and, in some cases, local taxes specific to tourism.
Licenses. In some locations, specific licenses or permits may be required to legally operate a vacation rental. These requirements may vary, and it’s essential to comply with all regulations to avoid legal issues and penalties.
Management and maintenance. A constant commitment is required to ensure the apartment is in top condition for guests. Common tasks include cleaning, maintenance, and attending to other needs of the guests.
Regulations and restrictions. Some cities and regions have implemented stricter restrictions to control the growth of tourist rentals due to concerns about the impact on the local community and the housing market.
Competition. The vacation apartment market can be highly competitive, especially in popular destinations.
Impact on the local community. The concentration of tourist apartments can have an impact on the local community, increasing real estate market prices and generating changes in neighborhood lifestyles.
Marketing spending. Marketing is essential to standing out in a saturated market and attracting the attention of potential guests. This involves investing in promotional strategies.

How to invest in tourist housing

The steps to follow are as follows:

Defining goals. The most common goal is usually to generate extra income, in which case, you’ll need to specify how much and over what period of time you intend to achieve it.
Learn about the regulations. Vacation rental regulations in Spain are notoriously complex, largely because each autonomous community has its own set of regulations, but also because more and more municipalities have their own specific rules.
Market study. With the information obtained from this study, it will be easier to understand the dynamics of the sector at the global, national, regional, and even municipal levels.
Analyze your profitability. The hotel industry has been using a series of metrics to objectively evaluate the productivity of tourism establishments, known as KPIs, for decades.
Buy. If all the previous steps have been successful and everything is in order with the property, the next step would be to purchase the property and make it available for rent.

The main advantage of buying a property for tourist use is the profitability with a relatively low level of investment. However, in doing so, you must take into account the competition, restrictions, and taxes on tourism in the area where you intend to purchase the property.

Further information

This article is part of our service Real Estate Lawyer in Spain. Visit this section where you will find all the useful information on this topic, including a complete guide on How to buy a house in Spain.

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