31 Aug Buying a Bach – What to Consider
We’re coming into warmer weather and summer holidays, so naturally, people are looking forward to planning a holiday away from home. Have you got a holiday at the beach booked and now find yourself looking up ‘holiday homes to buy’? You are not alone!
If you are thinking about buying a holiday home? Here are some things to keep in mind:
Rental vacancy periods
The period of high demand for holiday hot spots is approximately 10 to 12 weeks a year – those same weeks a year are the same as when you most likely want to utilise the house. As such, if you wish to use the property to generate income, you will need to find the balance between renting it out and enjoying it for yourself. Before you buy, do your research and find out vacancy rates in peak and off-peak seasons.
Location
Try to choose a location that can be enjoyed all year round. It is inevitable that many popular holiday spots are going to be seasonal, however, you can aim to minimise the weeks the home is left untenanted by purchasing a property within a reasonable distance to townships or outdoor attractions, such as hiking or snow mountains for skiing in winter.
Upfront & ongoing costs
Beyond the standard upfront costs involved in purchasing a property, you also need to factor in holding and set up costs specific to purchasing a holiday home. The home will need to be fully furnished with all the amenities you’d expect when renting a home yourself.
If you’re planning to turn the home into a holiday rental to generate income, you need to consider property management fees, and costs associated with cleaning and maintenance.
Keep in mind, a holiday rental will likely suffer considerably more wear and tear than a long-term rental as there is a far higher turnover of tenants throughout the year. It’s a good idea to have an emergency kitty for out-of-pocket repairs should the unexpected happen.
With all this said, of course, if your purchase is purely a lifestyle choice, there are no rules. However, if you want to purchase a holiday home as a tool for wealth creation, I hope the three above points are helpful.