Important Factors to Consider when Buying a Holiday House
Perth Free Sale Appraisal: A lot of people are interested in adding a holiday house to their investment properties in Perth. Sometimes, a holiday house can be a great investment to add to your portfolio but sometimes it doesn't work out the way it should. Here are five factors to consider when deciding whether or not to buy a holiday house.
Investment or Luxury?
The first thing you must decide is whether you are going to buy a holiday house as an investment or as a luxury. In other words, are you going to buy it as a rental property and allow it to produce income or are you going to use it for your own vacations and make your money on long-term appreciation?
Can I Afford the Vacancies?
It is very easy to look at what a holiday house rents for during peak season and then extrapolate that rental over a period of 52 weeks. It simply doesn't work that way. There are going to be some great weeks but there are also time that nobody wants to go on holiday.
If your property is on the coast, for example, you will do great during Christmas and the beginning of the year but have vacancies during the winter months. You will have to compare your property to similar ones in your area to see how much you can collect for rent.
Can I add Value?
By adding value, we mean any improvement that can allow you to charge more money. This could be an extra room or a swimming pool. You could also update and modernise the kitchen.
How Can I Maximise my Rents?
You could turn the house into two smaller units. You could build a granny flat on the property. You could even rent one part as a residence and the other as a holiday house. Anything that gets more occupants and less vacancies will give you a better ROI.
What Effect will my Holiday House have on my Financial Flexibility?
Make sure that the holiday house doesn't detract from your opportunities to purchase other investment properties.
Call us on 1300 472 427 to discuss whether a holiday house is a good investment for your portfolio.
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