Investing in a recreation house can have different reasons. “Yield and profit may be important factors here, but they are not necessarily what motivates everybody to buy a recreation house,” according to Henkjan Prins, fair manager of Second Home International, a large-scale fair where  a complete overview is offered of the supply and demand with regard to recreation houses.

“There are also people that go for the surplus value on the long term and now want to make use of a suchlike house themselves. In general it is mainly the younger people that purchase a second home, because bank savings do not really bring in much these days. Renting out a second home is a quick and simple way to receive the double of the current interest that is offered by the banks. A yield of 3% of course is the minimal achievable interest, but it goes without saying that the role that the owner himself plays – an active or a passive role – is also very important.”

Few disadvantages

Investing in a recreation house does not come with a lot of disadvantages. “Of course you need to dispose of the money,” Prins says. “Not a single bank will lend you 200,000 euros for that. A disadvantage could be that when you urgently need the money, you have to wait for the profits that you receive or – even more drastically – you have to sell the house. But that might take a bit longer, depending on the sales price, the location and the surroundings.”

Location and surroundings determine the price

In general (new) recreation houses on leased land can be purchased as from 80,000 euros. Resale in the Veluwe – existing recreation houses that switch owners – is sometimes possible as from 40,000 euros. However, objects on land in private ownership can cost two tonnes. In Spain, the price highly depends on the location vis-à-vis the coast, the beach and a golf court. In Austria however, it is important that a house is close to a ski or walking domain. The location is sometimes more decisive for the price than the fact whether a house has one or two bedrooms. A lot of people prefer Spain, followed by the Netherlands, France, Austria, Turkey and Italy.”

Target group

In general investing in recreation house is more interesting for the target group consisting of people with two standard or high incomes. “The level of education also plays a role,” says Prins. “The average buyer is highly educated and has a university or college degree. The majority of the people interested in a recreation house works as an independent entrepreneur. The average age of the buyers has decreased slightly over the years, to 46-55 years old.”

Crisis

The market is looking back on a couple of difficult years. “Belgium, the country where we also organise a fair twice per year, did not really feel the crisis. But the Netherlands did. During these hard times, the Dutchmen liked to keep a tight hand on their purse and rather saved than spent money. However, this situation has recently changed and we are noticing a recovery to the level of the beginning of 2009. The Greek market suffered enormously from the crisis. Practically no investments were made in the Greek market in the past few years. However, we are getting positive signals again and it seems that everything is improving. We are especially monitoring the Spanish market, where the prices dropped significantly. Lower prices can be disadvantageous for a certain group, but also offer advantages to potential buyers. All those who had been dreaming of a nice apartment in Spain but could not afford it, are now offered the chance of a lifetime.”

In the Netherlands or abroad?

There is practically no difference between the yield of domestic objects vis-à-vis houses abroad. Prins: “This also depends on what the owner does: people who rent the house out on their own will have a higher profit than those who outsource the entire procedure. The weather also plays a big role: if the Netherlands do not have much of a summer, people will be more inclined to book an apartment or house abroad.”

Tips

* Make sure that you get enough information before you visit or buy a property.
* Always look at the accessibility of the location and the duration of the season, also in light of possible rental in the future. A location that is 2.5 hours away from the airport is a lot less interesting to potential renters.
* Look at how long the season lasts in which there are frequent flights to the location and how the accessibility by car is.
* Research the legislation in the country of purchase. Second Home organises seminars during its fairs about buying a second residence with professional tax specialists, lawyers and legists.
* Take a look at what you want to buy with your own eyes. Of course this is not possible in case of new constructions, but those too have their pros and cons: you cannot move into them right away, but the price might be interesting. And you can have everything constructed according to your own wishes. But if it is possible in any way: visit the property.
* It is very important to familiarise yourself with the matter. There is a big market with a huge offer online, but that makes it difficult to separate the wheat from the chaff. Visit a fair, talk to real estate agents that are active in the region that you are interested in. Only then you can have a solid basis to compare from.
* Draw up a good step-by-step plan: inform yourself online, visit a fair/seminar after that and then book a trip to inspect the properties with several providers, in order to be able to make a good comparison.
* Try to gain local professional advice in the country where you are planning to purchase your house. Talk to a Dutch-speaking lawyer in France for example. It may cost you a bit more money, but the technical translation of a sales agreement and the communication is often difficult.
* Do not buy in a rush. Do not forget that emotion plays a big role and that you are dealing with high amounts of money.
* Visit the Second Home International fair in order to get more information.