Is a holiday house a good investment?

There’s nothing better than getting away over the festive season to one of the many picturesque holiday destinations Australia has to offer.

Whether you prefer to head north or south, a change of scenery can get you thinking about investing in a holiday house of your own.

It’s important to determine whether you want to utilise the property as a holiday home, as an investment, or a combination of both.

The most ideal situation is to keep the property available for when you want to use it and rent it out to other holiday makers the rest of the time. This ensures regular income to help pay the mortgage but also allows you to enjoy the property and surrounds.

You should take a business-like approach in the search for your holiday home and avoid making any emotional decisions. This is critical if you’re relying on the property for income. As with any property purchase, ensure you research prices in the area and realistically assess your existing financial commitments.

The location of your holiday home is particularly important if it’s an investment as this will have an impact on what return you’ll get from holiday letting. Look in areas that attract a lot of holiday makers due to local attractions or proximity to metro areas.

Alternatively, there is the option to purchase a unit within a resort development. These properties are leased back to the manager of the resort and offered as holiday accommodation. As the owner, you can usually make use of the property when it suits you.

Be sure to check the fine print with these purchases as you may acquire a share of a managed investment scheme, which can include a stake in the total income of the resort as well as expenses incurred by the development.

If you can’t find your dream holiday house, it could be worth buying a block of land. Securing a great block gives you the flexibility to design and build the house you want. If the plan is to live in the home when you retire, this option is definitely worth exploring.

Bear in mind that to attract holiday makers to your holiday home, you’ll need to fit the property out with furniture and kitchen essentials. Having items like a barbeque, television and laundry facilities will add to the appeal.