For many people, buying an investment property in their favourite holiday destination presents a double-dose of benefits – the chance to stay there regularly and build wealth at the same time. The property can also be the ideal retirement destination, and a place to treat family and friends.

However, before you take the plunge, here are some important points you should consider:

1) 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. Gaining such an understanding may require you staying for several weeks or longer to fully appreciate whether the location is going to stand the test of time.

2) KNOW ALL THE $
A holiday property is the same as any other property investment – you need to factor in all the costs: rates, electricity, maintenance, property management and other overheads; as well likely income to be received. A dream holiday property can quickly become a nightmare if you are not across the financials.

3) MANAGEMENT OF THE PROPERTY
It is likely that you will only spend a few weeks of the year at your property, so what happens for the rest of the year in your absence?

A good local property manager will not only ensure that ongoing maintenance issues are attended to quickly and effectively, but will maximise cash flow from rentals, and will also work to ensure that the property is consistently occupied and cleaned while you are not there. Engaging a local property manager to undertake ongoing maintenance is very important, as the last thing you want to do on your holidays is to spend them labouring.

4) DUE DILIGENCE ON IMPORTANT INDICATORS
If your strategy for buying a holiday property includes creating more wealth as well as enjoying the benefits of staying yourself, then there are some calculations required.

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.

You should also look at growth figures of similar properties over the past few years. This is good to keep in mind, and maybe necessary should you need to sell down the track.

5) TAKE SECURITY SERIOUSLY
If it’s likely that your vacation 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 an alarm system.

For all your real estate needs, contact our office on 4628 7444.