If you're enjoying some time away from your Bunbury property this summer season, you might be wondering if it's worth buying your own holiday home. As with any property investment, it's important that you consider the financial cost versus benefit.
Here are three questions to ask before making your decision.
A holiday home in Australia is great if you really will visit the area enough to make having your own accommodation worth it. While you save the costs of hiring somewhere, you have different costs to cover, such as mortgage payments, rates and utilities. Make sure that your holiday home expenses are less than you'd pay to rent a place a few times a year.
It's also worth considering where a holiday home sits within your wider travel plans. If you're hoping to visit some far-flung destinations over the next few years, will you be able to afford both?
If you're intending to claw back some of your expenses by renting your holiday home out to others, you'll need to consider the long-term demand. Will people still want to hire your property 10 or 20 years from now? Think about what developments are occurring locally that may sway how people view the area. It's also worth learning why people holiday in the area. If it's in proximity to a large city, for example, would an economic downturn affect your rental profits?
As well as rental income, looking ahead helps you to determine whether it'll still be attractive to buyers when you're ready to sell.
Assuming you need to make money from your property to sustain your investment, it's crucial to consider its year round viability. A property that only attracts guests during the school summer holidays isn't necessarily going to make enough to cover all your expenses and leave you with a profit at the end of it.
Similarly, certain seasons attract a much higher rental price. However, these periods are popular for a reason and may align with when you'll want to be making use of the property yourself. Be realistic about just how many weeks worth of rental income you are likely to earn.
As well as rental income, how often you rent your holiday home to others affects how it's viewed by the Australian Tax Office. While you're able to claim deductions for expenses associated with the property, they may be proportionately adjusted if you don't rent it year-round.
If a holiday home is on your agenda for 2019, talk to Ray White Bunbury about how we can help.