Is owning a holiday home a sound investment?
Western Australia has some of the most scenic and picturesque holiday destinations in the country, something which many West Aussies are experiencing more of since being encouraged to holiday within WA due to the border closures.
Whether you prefer to head north or south, a change of scenery can get you thinking about investing in a holiday house of your own. If this is something that you are seriously thinking about, it’s important to determine whether you want to utilise the property as a holiday home, as an investment, or a combination of both.
What will you use the property for?
The most ideal situation is to keep the property available for when you want to use it and rent it out to other holiday makers the rest of the time. This ensures regular income to help pay the mortgage but also allows you to enjoy the property and surrounds.
You can also look at adding your holiday home as a short-term rental property. Many areas across WA are experiencing rental shortages and providing short-term accommodation means you’ll potentially have your home available for when you need it, while also having money coming in during the low holiday season.
During the search, you should take a business-like approach and avoid making any emotional decisions. This is critical if you’re relying on the property for income. As with any property purchase, ensure you research prices in the area and realistically assess the ability to rent the property out.
Location, location, location
The location is particularly important if it’s an investment as this will have an impact on what return you’ll get from holiday letting. Look in areas that attract a lot of holiday makers due to local attractions or proximity to metro areas.
Alternatively, there is the option to purchase a unit within a resort development. These properties are leased back to the manager of the resort and offered as holiday accommodation. As the owner, you can usually make use of the property at certain times during the year.
Be sure to check the fine print with these purchases as you may acquire a share of a managed investment scheme, which can include a stake in the total income of the resort as well as expenses incurred by the development.
More information
If you’re looking to rent out your holiday home, you should fit the property out with furniture and kitchen essentials. Having items like a barbeque, television and laundry facilities will add to the appeal.
SOURCE: www.reiwa.com.au
