The pros and cons of buying a holiday home
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With just a few months left before the end of the year and the traditional summer break from work rolls around, many people are already starting to make holiday arrangements. And for some, this includes a plan to look around their favourite getaway destination for a vacation home of their own.
Such plans are being fuelled, at the moment, by lower prices in many popular holiday spots where owners who are over-extended financially because of the higher interest rates are trying to sell off their second homes, and eager to negotiate. And it is an excellent time for those with spare cash available to invest in property since they stand to make excellent returns as inflation and rates decline again over the next few years.
However, a holiday home for the exclusive use of your family and friends is quite a different purchase from an investment property that you intend to let to short or long-term tenants, and this is not a decision to make without first considering all the pros and cons.
The advantages include the convenience of having your own getaway to escape to whenever you want, and never having to worry about having to book in time or pay higher accommodation prices in high season. And with the trend towards more remote work, there's a good chance that you'll be able to visit the property more often than just once or twice a year, and get more enjoyment out of it.
In addition, you'll already be familiar with the location and amenities, so you won't have the stress of getting to know a new place while you're supposed to be relaxing on holiday. You're also more likely to make local friends and get involved in the local community, which is very important if you intend to retire to your holiday home in a few years' time.
Having your own holiday home also means, of course, that you can decorate and set it up to your liking while looking forward to a return on your investment as the value increases.
You do need to take into account though, that the property will require regular maintenance and perhaps repairs even when you aren't there, and that you will also have additional property taxes and utility charges to pay, as well as a monthly levy if you buy in a security complex or estate.
In fact, these costs may persuade you to start renting out your holiday home during the times when you are not there, and perhaps even restrict your visits so that you can maximise your income by letting during high seasons, at least until you do retire and move there permanently.
But if you do decide to do that, your very first move should be to appoint a professional rental management agent, who will relieve you of the difficulties of remote tenant and property management, and help you lower the risk of non-payment and inconsistent income.
Author: Chas Everitt
