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Buying a holiday home – What to consider.

Despite South Africa’s current economic drop, the demand for holiday homes remains hot among investors.

Unlike other types of investment properties available, there are a number of unique factors that should be considered when investing in a holiday home:

Rental Income:

Keeping a holiday home can be quite expensive and most investors choose to rent out their investments; however, this can be quite tricky – the stream of income created by renting out as a “Holiday Home” is not steady and is season dependant.

Purchasing a holiday home means that you want to go on holiday there, right? So that means you can’t rent out to permanent tenants, you only rent it out when you’re not using it and because we all like holidaying in the same seasons, that can really dip into the income earning potential of your investment.

Leisure:

When you rent out your investment property through a rental agency, it is your responsibility to communicate when you will be using the house as to notify potential guests that the house will be out of use during a certain period of time.

Now, like we said before, this can really hurt the income potential of this property.

Location:

When deciding where to purchase an investment property for use as a holiday house, it is very important to choose the correct location so as to attract tenants.

For example, purchasing a property on the coast will draw a number of tenants who love to holiday at the beach.

Maintenance:

Just like all investments, property requires maintenance and contents up keep in order to keep the property looking its best in a very competitive industry.

Final thoughts:

Holiday homes are financed like any other investment property. Therefore, an ideal option would be that of a structured loan, as it provides secured finance for property acquisitions that allow investors to borrow against a mixture of asset classes, such as a combination of property, shares, cash or investment portfolio

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