As the year winds down and the summer break approaches, many people are already making holiday plans. For some, this means exploring their cherished vacation spots with a desire to invest in a vacation home of their own.
Plans to buy a holiday home are currently driven by lower prices in many sought-after holiday destinations. Owners, financially stretched due to higher interest rates, are seeking to sell their second homes and are eager to negotiate.
“It is an excellent time for those with spare cash available to invest in property, since they stand to make solid returns as inflation and rates decrease in the coming years,” says Berry Everitt, CEO of the Chas Everitt International property group.
However, he cautions that owning a holiday home for personal use is distinct from an investment property for short or long-term rentals. Consider all the pros and cons before making a decision.
Plettenberg Bay (Courtesy: audleytravel.com)
Looking at the positives
“The advantages of buying a holiday home include the convenience of having your own getaway to escape to whenever you want, avoiding high-season accommodation costs, and potential for more frequent visits due to remote work trends.”
In addition, says Everitt, you’ll already be familiar with the location and amenities, so you won’t have the stress of getting to know a new place while you’re supposed to be relaxing on holiday. You’re also more likely to make local friends and get involved in the local community, particularly if you plan to retire there.
“Having your own holiday home also means you can decorate and set it up to your liking, while looking forward to a return on your investment as the value increases,” he says.
Langebaan (Courtesy: infoprop.co.za)
It comes at a cost
However, it’s important to factor in regular maintenance costs and potential repairs even when you aren’t there. “You will also have property taxes and utility charges to pay, as well as monthly levies in security complexes or estates.”
In fact, he says, these costs may persuade you to start renting out your holiday home during the times when you are not there, to maximise income until retirement.
If you do choose to rent your holiday home, Everitt recommends hiring a professional rental management agent to handle tenant and property management, reducing the risk of non-payment and ensuring consistent income.
