In an era of rising inflation, economic uncertainty and low rates of return on traditional forms of capital investment, more and more individual investors are looking for alternative ways to increase their savings. One of the increasingly popular investment directions has become holiday apartments. This form of investment combines the possibility of generating passive income with the potential for property value growth over time. But is it really worth it?
What are holiday apartments?
Holiday apartments are properties located in attractive tourist locations – by the sea, in the mountains, by lakes or in well-known cities. They are mainly intended for short-term rental to tourists and travelers. They can be both luxury apartments in resorts and smaller apartments in city centers.
The investor buys such an apartment to earn money from seasonal rentals (e.g. through Airbnb, Booking.com or local agencies). During the period when the property is not rented, the owner can often use it himself.
The Pros of Investing in holiday Apartments
1. High profit potential
Compared to classic long-term rentals, short-term rentals of holiday apartments can generate higher daily rates. In the summer or winter season, in attractive locations, prices for accommodation can be several times higher than monthly rates converted per day.
Example: An apartment by the sea in Sopot can bring in as much as PLN 500–700 per day during the peak season. If it is rented for 20 days a month, the gross income can reach PLN 10,000–14,000.
2. Diversification of investment portfolio
Owning a vacation property can be a way to diversify your investment risk. Unlike stocks or bonds, real estate is a tangible asset that doesn’t lose its value completely, even in difficult times.
3. Possibility of your own relaxation
Many investors decide to buy a holiday apartment also with their own comfort in mind. The possibility of spending holidays “at home” in a favorite location, without incurring rental costs, is a tempting prospect.
4. Property value growth potential
Attractive tourist locations tend to appreciate in value faster than other areas. If the region is developing, new attractions, infrastructure or public investments are being built, the value of the apartment can increase significantly within a few years.
Risks and disadvantages
1. Seasonality of revenues
Holiday rental income is erratic. During peak season, you can expect to be fully booked, but in the off-season—especially during the winter months in coastal locations—your apartment may sit empty, significantly reducing your annual income.
2. High maintenance costs
Holiday apartments require frequent cleaning, changing of bed linen, technical service and costs related to managing reservations. If the owner does not manage this himself, he must pay a commission to the management company (usually from 20 to 40% of the income).
3. Taxes and formalities
Income from short-term rentals is subject to taxation. Depending on the form of taxation (lump sum, scale, flat tax), the actual profit may be lower than expected. In some cities, there are also restrictions on short-term rentals (e.g. the need to register a business activity).
4. The volatility of the tourism market
Events such as the COVID-19 pandemic have shown how vulnerable the tourism market can be to global crises. A drop in tourist numbers can instantly deprive investors of revenue.
How to choose a good holiday apartment?
The decision to buy a holiday apartment should be preceded by a thorough market analysis. Here are some key issues:
Location
This is the most important factor. An apartment on the Baltic Sea, in Zakopane, in the Masurian town of Mikołajki or in the centre of Kraków will have a completely different investment profile. The availability of attractions, tourist infrastructure, communication and the reputation of the place matter.
Finishing standard
Tourists expect comfort. Modern decor, full equipment, Wi-Fi access, a balcony or a view – all this affects the attractiveness of the offer.
Rental service
Will the owner manage the property themselves or will they outsource this to a company? It is worth checking the availability and terms of cooperation with rental operators in advance.
Return on investment analysis
Professional investors calculate the ROI (Return on Investment). All costs (purchase, finishing, service charges, management, taxes) and the estimated annual rental income must be taken into account.
Sample calculation
Let’s assume that an investor buys an apartment by the sea for PLN 700,000. Additional costs (notary, finishing, equipment) amount to PLN 100,000. Total cost: PLN 800,000.
If the apartment brings in an average of PLN 6,000 net per month for 6 months of the year, this gives PLN 36,000 of annual income. ROI is:
(PLN 36,000 / PLN 800,000) × 100% = 4.5% per year
If we take into account the increase in the value of the property by 3% per year, the total return can reach 7.5-8% per year – which is attractive compared to bank deposits or bonds.
Alternatives: condo hotels and aparthotels
For people who do not want to deal with apartment management, an interesting option may be investing in so-called condo hotels or aparthotels. These are properties within larger complexes, managed by a professional operator. The owner receives a predetermined percentage of the income or a guaranteed rate of return, e.g. 5–7% per year.
The downside is less flexibility – the owner cannot always use the apartment at any time, and the possibility of reselling such a property is more limited.
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Is it worth it?
The answer is: it depends. A well-thought-out investment in a holiday apartment can bring attractive profits, but it requires commitment, analysis and market knowledge. It is not a product for everyone – especially for those who expect quick and easy profits without risk.
If the investor is prepared for seasonality, the volatility of the tourist market and possible additional obligations, investing in a holiday apartment can be very profitable – both financially and in terms of lifestyle.
Conclusions
Investing in holiday apartments is a way to combine pleasure with utility – but like any investment, it requires a conscious approach. Instead of acting impulsively, it is worth analyzing the data, comparing offers and possibly using investment advice. Ultimately, those who know what they are doing make the most money.