Puzzle Finance Blog


Holiday Homes - maximum pay-off for minimum outlay


David Adams offers tips on generating the highest returns from your beach house, through either rentals or a sale.

When it comes to a holiday let, the bare bones of the property — its layout and number of bedrooms — as well as its proximity to the beach and shopping strip, all play an important role in determining how much it can fetch in rental returns.

But there are also ways to spruce it up to ensure it generates the maximum rent.

If owners intend to rent out a property, experts say there's no need to spend a fortune on an expensive renovation. But presentation and comfort do matter.

Advertisement: Story continues below

"Even some basic cute three-bedroom beach shacks can come up nicely with a white-out inside and nice beachy furniture with a splash of colour and a coastal feel," says Troy Daly, principal of J.P. Dixon in Portsea and Sorrento.

This can be as simple as applying a fresh coat of paint and cleaning or replacing carpets or, for an easily maintained option, pulling them up and polishing the floorboards.

Rather than replace a tired kitchen, it can be more cost-effective to update key features — new benchtops, new door handles and a stylish rangehood, for example. In the bathroom, re-grouting tiles or repainting the bath can give it new life.

And it's important to remember that neutral colours and themes are often more in keeping with coastal surroundings.

The number of people a property sleeps is important when it comes to income potential, Mr Daly says. Installing two queen-size beds and two sets of bunks with trundle beds in a three-bedroom house, for example, means as many as 10 people could stay there.

"Two families can then come down and share the cost of the rent," Mr Daly says.

An open fireplace — which may mean simply opening up an existing chimney or installing a free-standing model — may also be a good idea if you're wanting to rent during the off season, he adds. "A lot of people will ask, 'Do you have an open fireplace?"'

Damian Cayzer, managing director of Bellarine Peninsula-based Kerleys Coastal Real Estate, says because comfort comes first with holidaymakers, the quality of furnishings can be a significant factor in determining rental returns, as can outdoor entertainment facilities.

He suggests adding an outdoor entertainment area — either a paved space or raised deck — complete with a good-quality barbecue, outdoor setting and perhaps even some outdoor heaters, to increase returns by as much as 30 per cent.

"We find those items really do add value and make the property more appealing," he says. As a bonus, having a quality cooking set-up outside can help reduce wear and tear inside.

It's also worth considering other features, such as an outdoor shower and storage for water equipment like surfboards and wetsuits.

And, according to Sean Thomson, property adviser at WBP Property Group, space in the yard that allows people to park a boat off the street can also make a property more attractive to renters.

Sales strategies

People looking to sell a coastal property should feel free to spend a bit more in creating a "wow" factor than those preparing for holiday rent but experts warn owners to be careful about overcapitalising.

"I think the only time it's really worth making a property look 'wow' is when you're going to sell it," says Catherine Cashmore, of JPP Buyer Advocates, "because the way to achieve the maximum price with any property is to attract as much buyer interest as possible."

However, Ms Cashmore warns that major renovations, such as those that significantly alter the floor plan, will usually require owners to hold on to a property for a while to ensure they recoup the costs when they do sell.

"It could be that you're saying to yourself, 'Well, I'm thinking about selling in a couple of years, [then] it might be worth renovating and finally moving the wall and making the front living area open plan," she says.

Putting in a new kitchen or bathroom to replace a dated one may be a good idea, according to Ms Cashmore.

But if the floor plan remains old-fashioned or is not amenable to modern living, she advises not to bother changing it because the new owners will more than likely want to renovate to their own style.

"You're probably better off just making it liveable as you would [with a house] for rent," she says.

The look of a property is paramount and Blane Paton, owner of Paton Estate Agents, which operates in Balnarring and Flinders on the Mornington Peninsula, says buyers in that area are generally looking for a house that is "well dressed".

This not only means ensuring it is well maintained and cared for; it can mean applying a fresh coat of paint, decluttering both house and yard and even hiring some stylish furniture for the duration of the sale period.

In an indication of what buyers are looking for, Mr Paton says among the first things people will add to properties when they move in are bigger windows, patios and decks.

While the agents Domain spoke with generally didn't believe adding sustainable features, such as a water tank or solar hot-water system, would make any difference with rental returns, it's a different situation when selling.

Sustainable features may help improve a property's appeal to buyers (although whether that results in a higher price remains debatable).

And while swimming pools are sought in some locations, the expense of putting one in means they should primarily be installed as a lifestyle choice rather than to add value to a property.

One of the most important factors in selling a coastal property is timing. Property experts say the summer holiday period — from just before Christmas to the early weeks of February — is usually the best time to market a property.

But making sure the market is generally rising is also a good idea.

"The market is volatile in coastal areas and people don't usually go shopping for holiday homes unless they're in buoyant times," Ms Cashmore says.

Posted by David Adams - Domain - The Age on 8th January, 2011 | Comments | Trackbacks
Tags:

Bookmark and Share

The trackback URL for this page is http://www.puzzlefinance.com.au/trackback?post=23000059


Trackbacks

There are no trackbacks for this post


Comments

There are no comments for this post


Post a Comment

HTML is not allowed in comments, http://... will be automatically linked.


Name (required):


Email Address (not displayed):


Comment (required):


To help prevent spam, please enter the word heal here:

Puzzle Finance Blog

About Puzzle Finance


Archives

September 2017
August 2017
July 2017
June 2017
May 2017
March 2017
February 2017
January 2017
December 2016
November 2016
October 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010

Tags

Purchase or Rent (1)
The Age (1)

Recent Puzzle Finance Blog Posts

8 Sep 17: Why property investors aren’t necessarily as rich as you think they are Investors have surged in the Sydney and Melbourne property markets at  record levels  over the past few years, with many amassing significant prope... [More...]
5 Sep 17: ‘Risks magnified’ when investors use equity loans to buy multiple properties A common strategy used by property investors around Australia to amass large portfolios of real estate is potentially very risky, experts warn. More th... [More...]
30 Aug 17: Investors can own multiple properties but still be eligible for first-home buyer benefits A little-known loophole across all states and territories is allowing investors, who already own multiple properties, to take advantage of governmen... [More...]
29 Aug 17: A homeowner's guide to letting on Airbnb More and more homeowners are looking for ways to increase their household income. This includes looking to their family home to provide extra funds through Ai... [More...]
27 Aug 17: Organise finance early this spring property season  With more properties soon to hit the market, lenders will be stretched and house hunters should organise finance well ahead of time, prop... [More...]
26 Aug 17: The obvious mistakes first home buyers make JUST say you won the Lotto or a kindly relative left you a sizeable inheritance and, hooray, you have a deposit for a bedsit in a far-flung corner of Sydney.... [More...]