Thinking of buying a vacation home? Here’s how to pay a realistic price!

Wondering if the asking price for a vacation home is in line with the market? Find out how to realistically assess construction costs, value retention, and return on investment.

Imagine you’re walking through a brand-new vacation resort. The sun is shining, the decor looks sleek, and the salesperson is enthusiastically explaining the return on investment. A modern chalet with all the bells and whistles for €239,500. You feel the temptation: this could easily become your second home—and a great investment.

But how do you know if that property is really worth the asking price? What exactly is included in the price? And what will happen to its value if you want to sell it in five years? In our experience, many potential buyers find it difficult to assess whether the asking price of a vacation home is realistic. In this blog, we’ll teach you how to assess the true value of a vacation home as a buyer. You’ll gain insight into how new-construction prices are structured, what typically happens to a home’s value after purchase, and which factors influence the future selling price. We’ll also discuss how to approach financing wisely.

When you buy a newly built vacation home in a vacation park, you’re not just paying for the materials and the land, but also for the work and the risks the developer has taken. This includes purchasing the site, obtaining permits, installing infrastructure, and building amenities such as swimming pools, restaurants, or playgrounds. All of this is in addition to the construction costs of the homes themselves. So it makes sense that the developer would want to see a return on the effort expended and the risks taken.

Given the wide variety of new recreational properties on the market, it’s very difficult to clearly define what a realistic purchase price should be. We do have a rule of thumb, though—which, for the reasons mentioned above, you should take with a grain of salt. For a modern six-person chalet (55 m²) on freehold land, the developer’s acquisition costs can easily reach around €158,500, excluding VAT. If the property is sold for €240,000, that represents a margin of about 30 to 35%. That may sound like a lot, but it also covers marketing costs, personnel expenses, and business risk. Moreover, as a buyer, you benefit from a home that is delivered turnkey, including furnishings, a garden, utilities, and infrastructure.

With pre-owned vacation homes, you’ll often find that the biggest drop in value has already occurred. Think of it like a new car: the value often drops the most in the first few years. After that, it stabilizes. If the property is well-maintained, inflation can easily offset that dip over time. Especially with properties in prime locations or with unique features, you’ll see that the value rises more quickly or that there’s positive value appreciation right from the start.

As a buyer, you want to know whether a home will hold its value or even appreciate. The most important factors in this regard are:

1. Location and Uniqueness
   Is the home in a prime location, right on the water, or in a sought-after spot in the park? Is it one of only a few with a specific design or layout? The more unique it is, the more stable its value.
2. 
   Land Status Homes on freehold land generally retain their value better than those on leasehold land. Pay attention to the term and conditions of leasehold contracts or rental agreements.
3. 
   's Rentability Is the property being rented out effectively? Is there a professional rental agency managing it? Does the community have good online visibility? A high occupancy rate makes your property more attractive to future buyers.
4. 
   Construction Quality Sustainable materials, good insulation, and energy-efficient systems result in less maintenance and greater value retention. Energy efficiency ratings are becoming increasingly important.
5. Organization and Flexibility
   Can you decide for yourself whether or not to rent out the property? Do you have to outsource maintenance, or can you handle it yourself? Are there any restrictions on your own use of the home? Is there a well-run homeowners’ association or a professional property manager? These kinds of issues are always important to future buyers.

You don’t always have to pay the full amount out of pocket to invest wisely in a vacation home. By financing the purchase (in part) with borrowed money, you can actually get a higher return on your own capital. This principle—the leverage effect—can work to your advantage, provided you know what you’re doing.

If you finance part of your purchase with borrowed money, you can increase your return on equity. This is called the leverage effect. For example, if you borrow €150,000 at 3% interest for a home worth €200,000, your return can increase significantly as long as the rental income exceeds the interest payments.

Please note: this works both ways. If the value of the home drops or the returns fall short of expectations, you’ll still incur a loss. Therefore, always ensure a healthy balance between your own funds and the loan, and work with a reliable financial advisor. In our home-buying course, you’ll learn more about reliable financing partners, financing using home equity, and the leverage effect. We also provide helpful resources, such as calculation models, to help you structure your financing optimally.

If you understand how the price of a vacation home is determined and which factors contribute to its value retention, you can make better choices. Whether you opt for a new construction with tax benefits or a popular pre-owned home in a prime location, be sure to critically assess its value. Don’t be fooled by a beautiful facade; instead, draw your conclusions based on established analytical criteria. That way, you’ll not only enjoy ownership but also the future sale of your vacation home.

Want to learn more about smart investing in vacation real estate? Take our buying course or request a free consultation at www.selectvakantievastgoed.nl.