Buy A Holiday Home
While buying a holiday home is not for everyone, it’s an Australian dream for many to have a second home where you can go for holidays and perhaps let out in the off-season. But is it really worth it to buy a holiday home? Will you gain sufficient income if you rent it out? What are the costs of maintaining it? These are some of the most important questions you need to answer before buying a holiday home. Today, 3Carrots will help you determine whether a holiday home will be heaven or a headache! Let’s examine the things you need to consider one by one:
- The location. It is always tempting to buy somewhere private, isolated, and far from the hustle and bustle of the city. But is it accessible? Is it near the airport? How’s the influx of tourists if you are planning to rent it out? Location is very important because this will determine the future value of your property.
- The real costs of buying a holiday home. While you can save a lot on future vacations since you don’t have to pay for hotels anymore, buying a holiday home can be a high-priced business. You need to factor in the cost of maintaining it, which includes repairs, repaint, gardening, etc. Though the rules and costs may vary in each state or territory, you also might need to pay land tax since the property is not your main residence. And if you are renting it out, you might need a local property manager who will deal with your tenants, who gets roughly 15% of the rent.
- Insurance. While you are renting it out, your holiday home will be vulnerable to general wear and tear of the tenants. Aside from 100% building and contents insurance, you might want to apply for short-stay insurance cover and public liability insurance for your renters. These types of insurance protect you from any loss of rent due to damage caused by tenants.
- Advertising. There are many free advertising platforms online, but since the competition gets high every minute, you might want to spend minimal advertising on websites or newspaper. Some holiday homes maintain their own website and go high on social media exposure. Be creative, get referrals, and don’t underestimate word of mouth. It may be hard at the beginning, but you will reap good reputation and great rewards in the future.
If you need an expert advice on how to successfully fund your holiday home, don’t hesitate to talk to one of our 3Carrots mortgage brokers! We are glad to help you.