News & Advice.
Maximising Your Holiday Home Investment.
Is this the year you have decided to take the plunge and invest in a holiday home? Whether you’re looking for a simple escape or luxury abode, the key to finding the right holiday home and maximising its potential is being armed with inside market knowledge and following a few simple rules.
According to buyer’s agent and Maker Advisory’s Head of Advisory, Reece Coleman, “When we’re looking at potential holiday homes we don’t look for a typical home in the area but instead focus on the ‘three Ps’—position, potential and profitability,” Mr Coleman says.
“The same income can be generated by a $2.5 million home as from a $4 million home when the three Ps are adhered to. For instance, you don’t want a holiday home that’s miles from services or a weekender on five acres that will cost a small fortune in maintenance and gardening fees.”
The key features Reece and his team of buyer’s agents look for when searching for a perfect holiday home for their clients include:
- High-quality – a good holiday home has to be better than a standard home in the area
- Desirability – it has to be pleasant, somewhere people want to spend their time
- Added extras – a good holiday home needs a well-equipped modern kitchen, for instance
- Indulgent – stylish homes with high-quality fixtures, fittings and furniture convey a sense of indulgence
- Proximity – a good holiday home needs to be near attractions—within walking distance or a short drive—such as beaches, cafes, restaurants and bars.
Once you’ve found a suitable property that ticks all your boxes, Reece advises paying close attention to the following elements in order to deliver the best return on your investment.
Double down on interior design
Once you have been handed the keys to your new holiday property, it’s time to work on its transformation. Enhancing appeal is everything. Prioritise investing in attractive decor and comfortable furniture, and also try choosing a theme to help cement the property in people’s minds. Think cosy country cottage, breezy seaside locale or mystical mountain hideaway - but whatever look you choose, remember to keep it stylish and appealing to all guests.
“When you’re developing a holiday home and fitting it out you need to start from scratch,” Mr Coleman says. “People won’t pay a premium to sleep on an old second-hand bed or relax on the frayed sofa that has been sitting in your house for the last 20 years.
“Fitting out your holiday home doesn't have to cost a fortune either, but bear in mind that people expect a destination to feel luxurious and tick lots of boxes like having quality appliances, or a romantic fire-side couch. It’s always the little things that make a big difference – such as quality linen and hotel-style toiletries.
“Remember guests are looking for an aspirational experience—your holiday house has to be ‘Instagramable’ and make them feel they’re living among the pages of Belle magazine,” added Reece.
Keep on top of the maintenance
Equally important is maintenance. Cleaning and gardening must be done weekly not monthly. If your property has a pool, the same applies. People do not want to find cobwebs in corners or leaves in the pool when they have paid good money for a home away from home.
“Holiday homeowners must be aware that they can’t leave the grass to grow too long or ignore something like chipped paint on the gate simply because they haven’t had time to attend to it,” says Reece.
Understand your financial obligations
“While a holiday home can generate the equivalent of a full year’s rent over the Christmas holidays there are several other financial aspects that also need to be understood first,” Mr Coleman explains.
This includes being aware that banks will not generally take holiday home income into account when assessing a loan. And that while income from a holiday home can be significantly higher than that of a run-of-the-mill rental property, your costs are also higher. “Management fees can be double or triple standard management fees for a regular investment property - 15% for example, instead of 7%,” Reece explains.
Bear in mind that cleaning and maintenance costs will also be higher depending on location, and staff availability.
Comply with tax and other regulations
“All holiday homeowners must remember that the more they use their own home the less they will be able to access the tax benefits. Owners are only allowed to claim deductions for the nights their property is available for lease as a holiday home. For this reason, owners must keep a log of how often they stay at the home,” says Reece.
New regulations now require holiday homes to be placed on a state register for short-term rental accommodation (STRA) before it is rented out. For information on registering holiday accommodation visit the New South Wales STRA website or check with the equivalent office in your state.
Build your property’s brand and reputation
“Each holiday home, no matter how small or large, should have its own brand, its own reputation. This is a crucial aspect to consider when managing a holiday home,” Mr Coleman says. “Most top holiday homes for instance have their own Instagram accounts and Facebook pages. Guest reviews are equally important.”
It is also imperative to make sure the property is available at key times. “Ensure your holiday home is usable by others during popular times such as over Christmas, New Year, or peak school holiday periods,” Mr Coleman says. “The secret to making money with a holiday home is to have it available at key times which also builds its popularity and reputation.”
Beware of getting too attached
Last but not least – don’t get too attached. “Don’t fall in love with your holiday home too much,” Mr Coleman warns. “By the same token try to avoid decorating your property with any pieces over which you will cry if they are irreparably damaged or disappear. If your tastes do run to expensive artworks make sure you have them alarmed.”
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