Do Holiday Homes make Good Investments?
I’m often asked the question on whether or not Holiday homes make for great investments and generally speaking, from what I’ve seen, it doesn’t and largely it comes down to the fact that the time when you want to rent it out to get the maximum money from is actually the time when you want to spend the time in there with your family. So that actually is a bit counterproductive. And if you think about the cost of the property over the 52 weeks of the year, you may actually find that it is cheaper for you to rent someone else’s holiday home for that 2 weeks that you want to use it and save all the other money that you would have spent on the property and put it in another investment, maybe closer to the CBD. So that’s actually something to keep in mind.
I get that there is a lot of emotional value in having your own holiday home. Being able to drive down on a Friday night, after work, with the family and maybe a couple of friends to really enjoy the weekend and I do get that.
And that’s a decision that you got to make in terms of your lifestyle. But whether it stacks up as an investment, generally speaking, nine times out of ten, I would say that it doesn’t.
Now, if you are going to buy something that is for holiday letting and you have decided that it is what you want to do, it is important to think about what style of property that you are going to buy. Quite often you can get into serviced apartments and things that I guess, lack a little bit of owner occupier appeal and they do have some restrictions when it comes to lending because the lenders like to see that they have full control and if you are actually going to put your property in the pool, a tenanted pool and in a holiday let scenario, quite often they would reduce the loan to valuation ratio on the property. So if it is really critical and really important and it’s part of your bucket list to buy an investment property that also acts as a holiday home, certainly recommend that you steer clear of serviced accommodation and hotel accommodation and get a stand alone property that you are fully in control of. But at the end of the day, it all comes down to the numbers and the question of whether or not holiday homes stack up as a great investment, nine times out of ten, you will probably be better off putting your money somewhere else.