Mark Anderson was always peering in real estate agency windows whenever he was on holiday. Noting the prices, checking out the features. He was like any typical holidaymaker who dreamed of owning their very own weekend escape. ”I wanted somewhere I could treat as my own, as opposed to a caravan park or someone else’s holiday house,” he says.
”I liked the idea of personalising a place and knowing your things will be there instead of having to pack everything in the car.” Anderson and his wife Louisa had been thinking of buying a holiday house for 10 years. In 2012, their fantasies turned into reality when they purchased a property in Venus Bay, on Victoria’s south-east coast.
”We had always wanted a house by the ocean,” he says.
”And I love fishing, so a place like Venus Bay offers surf, river and inlet options. It’s also commutable in that it is a two-hour drive from Melbourne and we can make a day trip if necessary, or leave early on a Monday morning to start the working week.” The three-bedroom, fully-furnished house cost the Andersons $260,000. They estimate it would be worth $270,000 now.
But making a return was never the aim, says Anderson.
”If you are only measuring an investment by cold, hard cash it probably isn’t a good investment,” he says. ”I like to throw in some of the intangibles of lifestyle and family benefits and we bought our holiday house with that in mind. Financial advisers were keener on me buying their investment products and inner-city apartments, but there is more to life than dollars and cents.”
The couple and their three adult children stay at Venus Bay as often as they can and also rent it out for $950 a week or $250 a weekend. But the occupancy rate is just 13 per cent. It is often leased during school and public holidays, when the Andersons would like to be there.
This is the downfall of the ”hybrid holiday house” theory, says buyer’s agent Chris Gray.
Worst of both worlds
”In the peak periods is when you want to use a holiday house, but that’s when it’s going to get the best rent,” he says.
”So if you’ve got a place in a ski resort, you want to use it in the middle of winter.
”Or if you’ve got a place on the coast, you want to use it over Christmas, New Year and the summer season and that’s when everyone else wants to use it, when you would be making a fortune.
”So unless you want to do the opposite and go to a ski resort in the middle of summer and to the beach in winter, it’s not generally going to work out as well.” The common mistake most holiday house buyers make is relying on their property as an investment. Gray says weekenders are luxuries, not nest eggs.
”People choose holiday homes purely on emotion,” he says. ”They’re not buying in the highest capital growth area, not looking at tenancy, not looking at what industry is supporting the local area.
”They’re buying based on where they want to hang out on the weekend and it’s the worst possible way to invest.”
During the global financial crisis holiday homes were often the first assets to be sold off, says Gray. However, today there is more economic stability and with Australia’s property market performing strongly, Gray says it’s an opportune time to investigate holiday homes.
”Now’s not a bad time to get in,” he says, ”Everyone’s has got over the GFC and they probably have more equity than they had a year or two ago.”
Angela and Rob Swincer own two holiday apartments in picturesque Port Lincoln, South Australia. The couple bought the properties purely as holiday accommodation and have never spent any of their own holidays there.
When they bought one of the properties in 2009, the occupancy rate was 45 per cent.
Today it’s at 80 per cent, which Angela attributes to the property having its own website, Facebook page and increased advertising online and at the local visitor information centre.
”I might put in two to three hours a week on social media and answering queries, and it’s made a huge difference,” she says.
Both of the properties have absolute water frontage, so the rental prices are between $220 and $250 a night.
It may seem high, but after paying for a cleaner and ongoing maintenance costs, Swincer says she won’t be retiring any time soon.
”Eventually it will be a good investment,” she says.
”When it’s busy it’s good to have some extra cash coming in, but a lot of that is spent back on the property.” ???????????????>>????????Holiday home dos and don’ts
Summer is the season for holiday house purchases. But before you take the plunge, Jessica Darnbrough from Mortgage Choice says there are some important rules of thumb:
- Contain your search to properties within a two-hour drive from the CBD. These houses are much more likely to have higher occupancy rates than those further afield.
- Ensure you can survive the lean periods. Don’t base your loan repayments on regular rental returns because there are sure to be quiet months.
- Look for a property that’s in good shape. You don’t want to be spending a small fortune on repairs. Holiday houses are for holidays, not work.
- Aim for a deposit of at least 20 per cent. It’s not essential to own another property before buying a holiday house, but it is crucial to have a meaty deposit.
- Speak to local agents and research online booking sites to get an idea of what rental returns and occupancy rates to expect. Does your holiday house destination have a proven rental market?
- Choose a house with an ample kitchen. Tourists are likely to want to save money by cooking for themselves on holiday.