Holiday houses on the coast seem like a dream come true, so let’s look into the positives of owning one!
It is not uncommon for a couple or a family to go interstate or abroad on vacation and find themselves enticed by a location. Whether it be a house on the beach, a log cabin by a river, or a house near the snow, it’s easy to see the appeal of needing somewhere to escape, and can perhaps lessen the anxiety that can come with traveling.
Even though the combo of lease income and simple future vacations is appealing to many, it is important to thoroughly think about the advantages and disadvantages of purchasing a vacation home, to attempt to avoid creating a terrible impulse purchase. Buying a vacation home is excellent if, and only if, it fits with your fiscal situation and long-term targets. Listed below are a couple of the chief benefits and pitfalls of vacations homes you ought to think about prior to purchasing.
WHY SHOULD I INVEST?
Many buyers will purchase their holiday home thinking only they will use it. You may go there to get a spontaneous weekend holiday or a few weeks around Christmas. The luxury is yours.
Choosing a location is incredibly important because if the location is in demand you can lease it out when you aren’t using it. Even if you don’t wind up making massive sums of gain from rent, it will assist in paying for items like an insurance policy and maintenance on your vacation home. Your property may also appreciate in value over time, increasing the net value of your investment. Property investment books are an excellent source of free information to help you gauge how the property market is currently working.
If your vacation home is also an investment, then it means that a number of the running costs (for example, interest on a mortgage and maintenance) could be tax deductible, but beware of the ATO’s limitations around this. You can read more on the ATO’s policy on holiday homes here.
Discussing long-term, a vacation home in a perfect location with access to all the requirements could result in a superb main house after you retire.
THE LARGER HOLIDAY HOME PICTURE
When considering purchasing a vacation home it is vital to decide exactly what the property is for, what it will reach and over what time frame.
Just like any real estate investment, location is paramount if you’re to reap any capital profits. You need to purchase in regions which have economic strength. Like most investments, your holiday house will increase in value over time. A financial planner or accountant may also suggest the ideal method of entering the home buy so that you get maximum advantage from the mortgage on your personal case. This might be an interest-only loan or a fixed term loan. Seeking advice from a property investment specialist can certainly clear any doubts you may have!
If you think you’ll use the home for holidaying four or three weeks of the calendar year, then lease it out for the remainder. Learn how long the vacation season is in your preferred location and try to determine what is considered peak and off-peak. You can then learn whether the projected rental income within this brief window pays a percentage of the mortgage to make it rewarding. Factors that can help to allure travelers can include the beach, fishing, hiking etc. Using hospitality apps like Airbnb is a great solution to finding travelers to lodge. You never know, this could pay for a new holiday elsewhere!