Holiday Home vs Investment Calculator

Holiday home vs investment calculator compares buying a holiday property to investing the same capital in markets. 400k holiday home generating 15k annual rental income (10k after expenses) vs 400k invested at 7%. Over 10 years: property cumulative income 100k vs investment growth 386k. Investment wins by 286k for purely financial purposes.

However, holiday home offers personal use value (free family holidays), emotional satisfaction, lifestyle benefits not captured in pure financial comparison. 5k/year in family holidays you didn't have to pay for adds 50k value over 10 years - narrowing the gap to 236k.

Holiday home reality: high maintenance costs (10-20% of rent), seasonal income concentration, management headaches (cleaning, key handover, complaints), changing local regulations (Airbnb bans in many cities), property tax rises, capital tied up in single illiquid asset. Most successful when in stable holiday markets with year-round demand and where personal use justifies financial trade-off.

Quick example

With holiday property price of 400,000 and annual rental income of 15,000 (plus annual expenses of 5,000 and alternative investment return of 7%), the result is -286,860.54. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Holiday Property Price, Annual Rental Income, Annual Expenses, Alternative Investment Return %, and Investment Period. The rate and the time horizon usually dominate — compounding means a small change in either reshapes the final figure more than a similar shift in contribution size. Test this by doubling one input at a time.

What's happening under the hood

Property net income (annual × years) vs alternative investment compound growth. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Where this fits in planning

This is a "what-if" tool, not a forecast. Use it to test ideas before committing: what happens if the rate is 2% lower than hoped, what happens if you add five more years. The value is in the scenarios you run, not the single answer you get from the defaults.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.