In­vest­ing in a hol­i­day home

Whitsunday Times - - REAL ESTATE -

AF­TER much longed-for school hol­i­days are done, many peo­ple across the State of­ten re­turn home with some­thing much more pos­i­tive than a case of back-to-work blues.

Ac­cord­ing to the Real Es­tate In­sti­tute of Queens­land (REIQ), a trea­sured hol­i­day can of­ten lead to fam­i­lies buy­ing a hol­i­day home in that lo­ca­tion.

As well as re­tir­ing baby boomers, many younger peo­ple buy homes in their favourite hol­i­day lo­ca­tions in prepa­ra­tion for when they fin­ish work.

Th­ese buy­ers pre­fer to buy now and rent the prop­erty out so it will be avail­able for them in 10 or 20 years.

The Sun­shine State has long been a favourite hol­i­day des­ti­na­tion with peo­ple from across the coun­try with many long-time an­nual vis­i­tors of­ten de­cid­ing to buy a hol­i­day home.

Ar­eas around the Gold and Sun­shine Coasts are of­ten tar­geted by baby boomers re­tir­ing to sea­side lo­ca­tions from places as far afield as Mel­bourne and Syd­ney.

Less well-known lo­ca­tions such as Bris­bane’s is­lands, parts of the Gold and Sun­shine Coasts’ hin­ter­land and smaller coastal lo­ca­tions be­tween Noosa and Bund­aberg usu­ally at­tract a higher pro­por­tion of Bris­ban­ites.

Lo­ca­tions south-west of Bris­bane, such as Stan­thorpe and Boonah, con­tinue to be popular places for hol­i­day homes.

Th­ese ar­eas of­fer an es­cape from the city yet are only a few hours’ drive away.

But sim­i­lar to other prop­erty in­vest­ment de­ci­sions, rental re­turns and cap­i­tal growth should be con­sid­ered when buy­ing a hol­i­day home.

Most fam­i­lies dream of own­ing a hol­i­day unit on the beach and let­ting it to tourists when they don't need it, how­ever few have much idea of what in­come it is likely to gen­er­ate.

Un­like stan­dard res­i­den­tial in­vest­ment prop­er­ties that are rented out on a long-term ba­sis, in­come from hol­i­day-let prop­er­ties re­lies not just on the rental rate but on the oc­cu­pancy level.

Even if you get a good room rate on your unit, the re­turn from your in­vest­ment will de­pend on how of­ten it’s oc­cu­pied.

Po­ten­tial buy­ers also need to take into ac­count the op­er­at­ing costs of the com­plex, which in­clude man­age­ment fees, main­tain­ing the room through clean­ing, re­pairs and re­place­ments, mar­ket­ing and ad­ver­tis­ing.

On av­er­age, th­ese costs can eat up 40 per­cent to 50 per­cent of the gross in­come from the unit. And, if you want to max­imise your in­come, you won’t be able to use the prop­erty in peak pe­ri­ods such as school hol­i­days

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