While relaxing and enjoying good times at your favourite holiday destination, you stroll past the local real estate agent’s window and browse the offerings. Imagine, staying regularly or living in the same place where you have so many great memories. Imagine owning a property where time seems to stand still, and where enjoyment is the longest lasting impression.
For many people, buying an investment property in their favourite holiday destination presents a double dose of benefits – the chance to regularly enjoy the best of holidays and build wealth at the same time. Such a property can also represent the ideal retirement destination for the future, or somewhere to treat family and friends with affordable holidays in the meantime. While buying a holiday property seems a glittering prize, what are the key considerations before taking the plunge?
Make sure you really like the location
The first and highest priority is to know that you absolutely adore the location of your holiday property, and will be happy to adopt the area as your home-away-from home.
Easy accessibility should also be considered. If the thought of catching two flights, or driving 1000 kilometres every time you want to take a holiday seems overwhelming, then you may wish to consider something closer to your first home.
Know all the costs
A holiday property is the same as any other property investment – you need to factor in all the costs involved; rates, electricity, maintenance, property management and all other overheads involved. A dream vacation property can quickly become a nightmare if your holding costs exceed your budget, so make sure that you do your homework.
Do your research
Before buying a holiday property, make sure it has the capacity to attract enough holidaymakers to make the investment viable. Ask local agents about the average rental yield in the area, average rents for similar properties and occupancy rates, which can often be lower and more volatile in holiday locations. Most holiday destinations experience “high seasons” when rent prices can be increased to accommodate increased demand. If this season clashes with your preferred holiday times, you may have to forgo earning higher rents for your own enjoyment, and this should be factored into your calculations.
Take security seriously
If it is likely that your holiday property will be left unattended for weeks or months on end, to protect your investment it is crucial to consider security.
Depending on the location and type of property, this could take the form of contracting a security firm to patrol the property regularly, or installing security and alarm systems.
Arrange management of the property
It is likely that you will only spend a few weeks a year at a holiday property, so what happens for the rest of the year in your absence?
A good property manager will not only ensure that ongoing maintenance issues are attended to quickly and effectively, but to maximise cash flow from rentals, will also work to ensure that the property is regularly occupied and cleaned while you are not there.
With a dedicated Holiday Property Management team, we would be pleased to help answer any questions you may have about the management and requirements for a holiday rental in the area.
- Mark Forde