Don’t take a bath to own a holiday home

Purchasing a holiday home doesn’t have to be a financial blow out if you make a smart investment choice, writes Tam Wrigley.

Tamara Wrigley says making the most of unusual features and furnishing a holiday property is the fun part. Picture: Supplied

I remember as a child having a family holiday shack down in Dover, Tasmania, right on the water's edge.

It was where great childhood memories were formed.

For many, though, the idea of a home away from home may seem like a pipe dream.

But seeing as our holiday options are more limited due to Covid, maybe it's time to consider making your dream a reality.

Seven things to know before buying your first home

2021 home trends all about colour: Tamara Wrigley

Many people dream of having their own private getaway in a sunny coastal town or a cottage tucked away amongst the tranquillity of the bush.

After all, it means spontaneous weekends or mini breaks away without the burden of bookings and thousands of dollars spent during peak periods on holiday rentals.

Purchasing a holiday home doesn't have to be a financial blow out if you make a smart investment choice.

However, it's important to consider your purchase carefully and balance what you want out of a holiday home and what makes sense from a financial and investment standpoint.

My guide will help you get your head around what to consider and where to start.

 

Tamara Wrigley says it’s crucial to figure out your budget before you start looking for properties. Picture: Supplied

Start with a budget and research

Figure out your budget before you start looking for properties.

This includes determining if you have any equity in an existing property and getting pre-approval on finance.

Undertake plenty of research in the areas you want to buy to determine what you can afford and what your finance options are.

Shortlist your favourite properties and consider which ones are most feasible financially and offer the best chances of a high resale value.

 

Location, location, location!

Choosing between the coast and country is a great place to start.

Consider hobbies in the family such as hiking, surfing, kayaking and fishing.

Find a spot you really enjoy and make sure the property and location fit your lifestyle and preferences.

You should also consider resale value in case you want to sell later down the track.

So, look at things like proximity to schools, shops and public transport and other amenities.

If you're considering living permanently at the property further down the track (such as when you retire), it's a good idea to find somewhere that's close to medical services and with a local community feel.

 

When buying your own slice of paradise, it’s all about location. Picture: Supplied

 

Consider ongoing costs

It's easy to get carried away with the prospect of rent-free holidays without considering the burden of upkeep costs.

Make sure you budget for both upfront and ongoing expenses, which include utilities, rates, maintenance costs, repairs, insurance and more.

Don't forget to factor in your budget for furnishing the place as well.

Understanding all of the ongoing costs will help you decide, early on, whether you need to rent it out when unoccupied by your family to offset the expenses, or, if you can just keep it as a private oasis.

 

What features do you want?

Consider the features that are must-haves in your holiday home, from how many bedrooms you'll need to how big you want the living room and kitchen areas to be.

Is a view essential?

Do you mind being close to the neighbours?

How much repair work and maintenance are you willing to do?

Is the property secure?

Are there shops nearby?

Is a pool part of your paradise?

Or, do you need big open spaces for activities?

These are all questions to consider carefully before jumping into buying a holiday home, no matter how idyllic it may seem.

 

It’s important to consider the burden of upkeep cost before purchasing a holiday home. Picture: Supplied

 

Will you rent it out?

Renting out your holiday home is a great way to offset costs and even make a potential profit.

You could rent it out as an Airbnb or for short term contracts.

Even if you don't end up making huge amounts of profit from rent, it will certainly help you pay for things like insurance and upkeep costs, which you'd be paying for out of your own pocket otherwise.

 

Consider property management

If you are planning to rent out your holiday home you may also want to consider a property manager so you can avoid the hassle of managing tenants.

This can be a great, stress-free way of ensuring your property will be looked after, but it is also another cost you will have to consider.

 

If using a short-stay rental platform like Airbnb, you'll also need to consider the cost of keeping your home clean and tidy.

This may involve employing someone to do the job.

A property manager can help with all management fees.

These costs will vary by location and it's important to factor them in when setting rental rates and forecasting the profit you'll make from renting out your holiday home.

 

Figure out tax implications or benefits

Keep in mind that you may be subject to other income taxes if your home isn't negatively geared.

If you plan to rent out your holiday house when you're not using it, you'll also have to pay tax on any income earned, although you may be able to claim deductions for expenses.

If your holiday home is also an investment, it means that some of the running costs (such as interest on a home loan and maintenance) may be tax deductible.

However, it's important to be aware of the Australian Taxation Office's restrictions around this. Read more about holiday home tax deductions.

 

Styling your holiday home

There are many things to consider when buying your first holiday home. Once all the serious stuff is taken care of, it's time for the fun part… styling.

A good approach is picking a theme that suits your location, whether that be coast or country. Comfort and low maintenance are the main objectives to decorating your getaway.

Big comfy couches and ottomans are great options, as is a big dining table for when friends and family are over.

Keep your cupboards stocked with the basics, but don't skimp on the luxuries like a great coffee machine.

 

Tamara Wrigley is a Sunshine Coast-based media commentator, award-winning businesswoman and property mogul, who bought her first property at the age of 21. Follow her Instagram page and Wrigleys Renos renovation page.

 

DISCLAIMER

The information contained is general in nature and may not suit your individual financial and personal circumstance, please contact your professional financial advisor, the ATO or your accountant for specific financial advice.

Originally published as