Investing in a holiday home - here's what to consider
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It's that time of year when we're all starting to think about our much-needed year-end break and getting away from it all. The appeal of buying a holiday home rather than renting one lies in the idea of owning a piece of paradise, as well as dipping into the buy-to-let investment market which can be extremely rewarding. Coastal living has become increasingly popular in recent years, meaning that many holiday homes are appreciating in value as well as demand. The idea of a holiday home - either on the coast or in certain other areas of South Africa - has therefore become a smart investment option.
The best holiday home for you
The first thing to consider when choosing a holiday home is your family's needs - both present and future. You'll need to consider whether you'll still be able to climb a long flight of stairs with ease in 10 years, whether the property is pet-friendly and whether there is space for your as-yet-unborn grandchildren, to name but a few considerations. To make sure that you've chosen the right area, you'll need to visit at different times of the year. You'll only know that you've chosen the right holiday town once you know what it's like in summer and in winter, and both in and out of peak tourist season.
From an investment perspective, a three-bedroom, two-bathroom unit is seen as ideal, and the value of sizeable entertainment areas should not be underestimated. If you've chosen a coastal location, you'll need to have sea views, and the beach should ideally be a short walk away. In locations away from the coast, breathtaking views and proximity to nearby attractions remain key factors in the choice of your ideal holiday home.
For the sake of security and convenience, it is best to buy a holiday property in a complex. Before committing, you will need to ensure that the body corporate is well run, the financial statements are healthy and that the complex is well-maintained. Your holiday home should be a well-run investment!
An important factor to consider when purchasing in a complex or apartment building is to ensure that they allow for short-term letting. This will be a make-or-break element in securing your return on investment when buying a holiday home.
Location, location, location
The perfect location for a holiday house is one close to an assortment of activities for the whole family to enjoy. From restaurants, curio shops and art galleries to beaches, lagoons, game reserves, hiking routes and fishing spots, the ideal holiday home should be close to everything the area has to offer. This not only ensures that your family has enjoyable holidays - but also that your property will be sought after as a holiday rental when you are not using it so that you can reap the financial rewards. As an added bonus, proximity to these features will ensure that your property is easier to sell in the future. You also need to think about convenience: you may want to be off the beaten track, but you don't want to be too far from shopping centres and arterial routes.
As with any property transaction, you need to do your research before you sign on the dotted line. You'll need to know how popular the area you have chosen is, and whether properties in the area are appreciating in value. Your holiday home needs to be both a relaxing haven and a sound investment.
Consider the costs
From a financial perspective, you'll need to bear in mind that it may be tougher to get a bond for a holiday property than it was to secure finance for your family home. You will likely need to put down a substantial deposit, and you may find that you are given a higher interest rate on your loan. Working with a bond originator will provide you with the greatest number of options and the best deal. Other financial considerations to bear in mind include the tax that must be paid on rental income and Capital Gains Tax.
Property remains a valuable investment and one that will bear fruit not only in cherished family memories, but also as a potential source of seasonal rental income and excellent resale value in the future. Jawitz Properties has a range of homes for sale in various South African holiday hotspots. Contact us today and let us be part of the journey to your holiday home.
Author: Jawitz Properties
