You’re not alone – almost everyone experiences the holiday blues when getting back from a week away unwinding on a sunny beach. From there, it’s a logical jump to want to keep the holiday vibe going for as long as possible. As a result, many people with the cash to splash turn to buying a holiday home.
It’s a dream for a lot of people, but it’s not always easy to turn it into a reality. A holiday home can be a sound investment, but you should be aware of the issues you might run into.
4 Points to consider before buying a holiday home
Before chasing the dream and moving forward with a purchase, first consider these 4 points:
1) Setup costs can be sky high
If you’re looking to attract a steady stream of holiday guests to your new property, it’s got to look the part. Unless you’re sitting on a substantial capital sum, it’s unlikely that you’ll be able to find a property that’s good to go.
As a result, you should be prepared for the setup costs which may well be higher than you think. For example, it’s now the norm to provide flat screen televisions in all of the guest bedrooms, as well as one in the main communal area. You’ll also need to be able to provide a steady internet connection for your guests to enjoy during their stay.
2) The costs don’t stop at setup
As you might well expect, the costs of maintaining a holiday home will be ongoing. Firstly, it’ll need to be cleaned thoroughly after each guest to avoid the next booking running into any unpleasant surprises during their stay.
Cleaning, laundry and general maintenance services don’t come cheap, so you should expect to have to set aside 18-20% of your rental yield to keep your property up and running.
3) You might not get priority on when to use it
One of the main perks of owning a holiday home? You’ve got a holiday home. If you need a break from your hometown for a few days, you can always load-up the car and drive down for some much-needed rest and relaxation, right?
Not necessarily – especially in the holiday season. If you’re keen for a weekend away with your family in your holiday home, you’ll often be turning down bookings to make it possible. For many investment property owners, this isn’t an easy choice to make.
During the off-season, it’s likely that your holiday home will have pretty low occupancy rates. If you can resist the urge for a few more months, you’ll be able to get the best of both worlds.
4) Check your liabilities
As a short-term holiday rental, you’ll manage to circumvent many of the responsibilities that a long-term landlord has to account for. However, that doesn’t mean that you don’t incur any liabilities at all.
If your holiday home is a strata title, first check that there aren’t any restrictions on renting to holiday guests. Ensure that you’ve got adequate insurance coverage for both intentional and accidental property damage and if you’ve got a pool, it’ll need to be up to your state’s pool safety legislation.
It’s you vs the competition
Remember – your target market isn’t just choosing whether to stay with you or not. They’re making the choice between you and your competition. By following the above points closely, you’ll craft your holiday home into a finely-tuned machine, giving them a reason to make the right call and get in touch with you.