How to get the most out of a holiday home investment
For many Australians, a holiday house by the beach is the holy grail of property ownership. Particularly this time of year, as the sun shines, each Friday droves of city folk head for a coastal escape.
For many people, the decision to purchase a holiday home is more about investing in their quality of life. The best advice for anyone considering a holiday home purchase is to ensure that you can afford to hold onto it long term.
If you do not correctly anticipate the costs associated with a holiday home, you might find yourself in a situation where you’re being forced to sell up.
Forced sales often result in the property selling for less than the vendor wants and less than what the property is worth.
Another important point to note is that coastal towns generally experience large peaks and troughs in prices. They spring up in summer when everyone is holidaying, and they come down in winter when people are hibernating.
During winter you’re less likely to experience inflated sales figures. Consequently, winter is generally a better time to buy.
If you do decide to put in an offer over summer be savvy with terms, ask for a longer settlement, perhaps a 5% deposit and access prior to settlement if you need to measure up or find tenants.
Good purchasing opportunities may also arise when there is global financial uncertainly, as this often produces fire sales. This opens up the market for people to secure themselves a quality property at a good price.
Some people choose to purchase a property, lease it out on a fixed tenancy then lease another property close by for a lesser price than their mortgage repayments.
As a result they can maintain their mortgage and still have the benefits of a holiday home in a coastal area.
It can be very rewarding owning a beach house but remember that it too will require maintenance and upkeep, if your property falls into disrepair in between seasons it will lose value and rental appeal.
Lauren Staley is director of Infolio, a buyers’ advocacy and property management company.
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