The potential value of a rental home, in terms of how enthusiastically it will be rented and the rental rates it can command, depends on a number of factors. These include location (which in itself is a complex subject), the number of bedrooms, the age, condition and quality of the furnishings, the pool size and pool heating options, and the presence of any special features, such as a pool/spa combination, a games room or a barbecue.

It is not easy to weigh each of these factors in terms of their impact on profitability, but if you are looking to buy a rental home you have to make some sort of assessment. Of course, the added rental value of some features has to be set against the higher cost of purchasing a property that has them. The whole calculation is fraught with uncertainties, so it is not going to be possible to do more than to offer some general guidelines here.

Fortunately, the exact specification of your rental home is a relatively minor factor in terms of profitability. How well you generate rentals is much more important. A property with plenty of potential can become a liability if the owner does not take steps to fill the bookings schedule, while a modest property can be profitable if it is marketed effectively.

New home and re-sales

I have put this at the top of this list, because it is usually the first question that the potential buyer considers. Unfortunately it is also one of the most difficult to answer. There is a natural attraction towards buying new. All the fixtures, fittings and furnishings are new and, like the home itself, under warranty. The buyer usually has some say in the layout or level of finishing, and may also have a choice of lots. The developers often make attractive-sounding offers in respect of finance or other features, too.

Having said all that, a re-sale will often represent better value. You need to calculate in the cost of redecorating sooner, and earlier refurnishing and replacement of appliances, etc, with a re-sale property, though. With a re-sale home you will often have some bookings in place, and the surrounding area is likely to be finished and attractive.

If you buy a new home, you may have to wait some time before you can place your first bookings, and you may sometimes find yourself close to building work until all stages of the development are complete. Some buyers will head straight for new developments, others will have nothing to do with them.

The bottom line is, I think, that it does not really matter to the long term profitability of your home if it is new or pre-owned, provided it is in good condition and provided you are aware of all the implications before you decide.