Purchasing An Investment Property for Holiday Accommodation
When it comes to purchasing a holiday property most people fall into one of two categories
1. Those planning to use and enjoy the property themselves.
2. Those seeking financial gain from their investment.
There may be a mixture of the two, but one need will still be of more importance than the other. This should be a strong influence in your purchase decision. You have several options once you purchase your property –
1. You can let it for permanent rental
2. You can let it for holiday rental
3. You can keep it untenanted and use it only for your use
If you are seeking financial gain from your investment you can choose to either go for a steady but lower yield through permanent tenants or for a higher yield through holiday rentals but take into account that there will be more down time when the property is not tenanted. Obviously, if you have permanent tenants you will not be able to stay in the property yourself whilst it is tenanted. Fisk & Nagle offer a professional property management service and will promote and manage your investment property for you.
If you are planning to use the property yourself you can still let it out as a holiday rental, but be aware you will sacrifice using the property yourself during the peak times of Christmas and Easter. You need to also be aware that if you buy a rights managed property you will only be able to use the property for a set amount of time per year, this varies but usually falls into the 4 – 8 week timeframe during the off peak season.
Generally, the rights managed properties are more affordable and have good holiday facilities, such as pools. You will pay an annual management fee, but you will have an onsite Manager who takes care of promoting and booking your holiday accommodation and maintains the property.
If you decide you want to have more flexibility for your own use of the property or keep it for your exclusive use (including friends and family) you will want to purchase a property that does not have an onsite Manager with the accompanying management rights. When searching for property always look for the tell-tale “rights managed” statement and if it is not obvious ask the Agent if it is rights managed.
When considering the purchase of a property you intend to use as a holiday rental you need to assess the probable income and expenditure. On the expenses side take into account the cost of the management rights (if applicable), body corporate fees, council rates and repairs and maintenance. The location of the property, its presentation and facilities will influence the amount of rent you can expect and good promotion as well as seasonal factors will affect occupation rates. For a thorough analysis of the expected income and expenditure on the property see a qualified Accountant.
The area of the Far South Coast of N.S.W. which includes towns such as Bega, Merimbula and Eden currently has a good stock of affordable investment properties. Call the Fisk & Nagle Sales Team on 1800 For Sale (1800 367 7253) to enquire about suitable properties in the area.
If you’re thinking about buying a property this winter then be brave and don’t let the herd mentality hold you back, says the boss of one of the country’s leading real estate agencies, warning investors that they’ll only look back on this year with regret if they fail to take action.
These are the thoughts of McGrath chief executive John McGrath, who has stated that “this is exactly the type of market they will look back on and say ‘I wish I’d bought in 2012’”.
Writing in his Market Review – Winter 2012, McGrath has claimed that, while following the crowd gives people a much needed sense of security in this time of economic volatility, “the best time to buy is when others aren’t”. The flipside to a market downturn is the exceptional opportunity it presents to buyers. Affordability has grown significantly with the recently released HIA-Commonwealth Bank Affordability Index showing an improvement across the capital cities for the fifth consecutive quarter in March.”
All of Australia’s big four banks have now announced their interest rate cuts following last week’s official cash rate drop by the RBA, and second tier lenders have followed suit.
A Loan Market online poll has found 88% of respondents intended to invest in property within the next 12 months. Fifty-one per cent said they were looking seriously at property, while 37% said they were interested, but wanted to ensure their employment was secure.
Only 5% of the survey’s respondents said they had no plans to invest in property, while 7% said they would sooner invest in shares.
A Loan Market spokesperson said consumer confidence was finally receiving a boost after successive RBA cuts.
“These rate cuts have also taken the variable interest rates offered by most lenders down below the 6.0 per cent mark. Homeowners are seeing significant reductions in their mortgage repayments while there are very competitive rates on offer for those looking to enter the property market,” he said. Source “Your Investment Property”
If you are considering investing in property, have you considered investing in property in Merimbula? This coastal town on the Far South Coast of NSW presents a very good opportunity for property investors, for both permanent rentals and holiday accommodation. There are good opportunities for investing in rights managed holiday rental accommodation and homes that can be let as permanent accommodation. With many families in the area and being a popular holiday destination Merimbula offers the best of both worlds when it comes to investment. And the indicators are that now is a good time to purchase a house, unit or townhouse. As local Real Estate Agent David Dwyer from Fisk & Nagle First Choice in Merimbula says “We have several houses on the market offering fantastic value. Now may be the perfect time to act and lock in low interest rates”. You can call David on 1800 For Sale.