Tom Pikusa and his wife, Sara Hinchey, both barristers, bought a beach house five years ago. For the self-employed couple in their early 40s, the four-bedroom house on a large block of land in Rye on Victoria’s ???????-Mornington Peninsula offered a source of retirement income.

“We thought we needed to think about how we want to transition out of being ???????-barristers at some point,” says Pikusa.

It helped that they were familiar with the area and knew there was a strong demand for rental beach house accommodation. In fact, Hinchey had bought a small house in neighbouring Blairgowrie early on in their relationship after getting frustrated at how much it cost to rent in the area.

Pikusa and Hinchey paid just under $700,000 in 2009 for the Rye property. It was a good call. Isabelle, as the house is named, last year brought in revenue of $75,000 – three times what it would make in long-term rental income. After (quite considerable) expenses, the net revenue is about twice the long-term rent they would otherwise get.

“It’s an amazing return,” says Pikusa.

Theirs is an unusual strategy. The beach house – a source of holiday memories for successive generations of Australian ???????-families – has never featured strongly as a commercial investment proposition and most owners, such as Sydney retirees Jim and Jolijne Meynink, keep it that way.

The Meyninks bought a shack at Tuross Head on the NSW South Coast in 2011. They use it throughout the year, but rent it out over summer.

“It is a double block which we are ???????-subsidising [by renting out] to build on so we can accommodate a growing family and grandchildren,” ???????-Meynink says. He doesn’t plan to sell the house but wants to pass it on to his children.

Making money out of a beach house is a tough business and price growth alone shows why.

To look at one example, the median value of an apartment in Surfers Paradise on Queensland’s Gold Coast – the best generic indicator of beach-location investment dwelling stock – has dropped more than 16 per cent over the six years to September, Domain Group figures show. In the past 30 years, the median unit price on the Gold Coast has risen nearly 3??????????????? 1/2 times from $97,000 to $335,000, not much more than the near-tripling of the consumer price index over the same period.

Not only do beach houses offer the prospect of a worse capital gain than urban residential property, the associated costs are higher. Property managers tend to cost more. Custom can be patchy. And the market can be fickle, especially when there is a large supply of similar product competing for business. “As a general rule beach houses aren’t a good investment because they generally have higher vacancy rates and are higher risk,” says Sydney buyers’ agent Rich ???????-Harvey. “As a general rule, beach houses are not something we recommend .????????????????????????.????????????????????????. You can get better yields and capital gains from other areas.”

Pikusa and Hinchey, who have made the beach house game work for them, treat the house as a business. It’s a commitment that takes up a lot of time. They have an agent who oversees all the online bookings and money but, even so, one of them checks out the house after each visitor has departed. They don’t use Isabelle themselves.

“We’ve never stayed at the house,” Pikusa says. “It’s just part of the commercial ???????-property business. It’s like an investment.”

Head to the AFR for the full story and buyer’s guide.

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Posted by Michael Bleby -The Age on 9th January, 2015