When you talk to a mortgage broker at Smartline Rockingham about investment properties, we like to get an overall picture of what you are trying to accomplish. Often, small investors discuss the possibility of buying a holiday house and making it pay for itself.
The old adage was that you should keep your vacations and your business separate and not make business decisions based on emotion. But a recent revelation by John McGrath on switzer.com.au had us rethinking our position.
According to Mr McGrath, many investors were forced to sell coastal properties as a result of the Global Financial Crisis. The selloffs have happened slowly, but the end result is prices that McGrath says have “softened significantly in the last year.”
Consequently, our stance on holiday house investments has also “softened significantly in the last year.” We think a holiday house can be a great investment, as long as you know what you’re doing.
No Holiday for You
One adage has remained constant: if you are trying to make a profit, you don’t get to spend the holidays at your holiday house. In some spots, there will be high demand for 8-10 weeks a year and no demand the rest of the year. If you want the home to pay for itself or provide you with extra income, you will have to rent it out during the popular weeks. That includes the holidays.
What’s the Plan?
Also, you need a firm financial plan before buying a holiday house. This includes a reasonable expectation of income and expenses with a “buffer” built in.
Location, Location, Location
Location will be THE most important factor that determines whether or not you can make money. The best way to find a great location is to visit popular online booking sites and find out where the “hot spots” are. This is a non-negotiable factor.
Call a Mortgage Broker at Smartline Rockingham
You need the right terms and rates on your mortgage. Every dollar counts. To learn more, call us today: (08) 9527 1800.