Buying a holiday home is an ‘investment’ that needs to be approached with caution. With the holiday season almost upon us, here are REBAA’s top tips to consider when buying a holiday home:
1. Never buy a holiday home at the peak of the market
When the property market is flat a quality property in a good location will always find a buyer. The properties that struggle are those that have major flaws or are in more unusual locations. A good question to ask yourself is: Would this property generate loads of interest in a buyers’ market? If the answer is no, be very careful what you pay for it.
2. Ensure you have a buffer of funds to cover unforeseen expenses
Even partially leasing during the tenure to other holiday-makers can incur costs, as these tenants can be more hard-wearing than long-term tenants. Consider having an emergency buffer for common items that may break down more quickly or require replacement due to increased wear and tear.
3. Consider ALL realistic costs
Many holiday home buyers forget that a second home incurs a second lot of expenses: electricity, water and council rates, maintenance, cleaning, annual pest inspections, land tax, insurances. Be realistic and seek professional advice if unsure of financial ramifications.
4. Is it cheaper to holiday-lease yourself?
Consider the long-term benefits of holidaying in the same place on a long- term basis. Is this really what you want? Financially, would you be better off holiday leasing rather than carrying the costs (and potential stress) of a holiday investment? This is an important question that needs to be considered carefully before you “fall in love” with any holiday home.