Buying a holiday home - pros and cons

Thinking of investing in a holiday home? Here are several pros and cons to get you thinking before actually taking that leap.

Pros of buying a holiday home

A holiday home can provide beautiful memories with your family. Hundreds of thousands of Western Australian’s make the journey overseas every year to do exactly what we can do right here; laze by the ocean. But intrastate trips have increased in popularity, perhaps owing to WA’s 20,000km of flawless coastline.

With a holiday home, you have access to rent-free holidays whenever you want and for however long you want. Forget paying over-inflated prices during peak season, your holiday home is available for your leisure at the drop of a hat. And you can leave whatever you want there, preventing you from having to pack up a heap of things every time you go away.

You could potentially gain a profit, or at least a steady income, from renting the home to others. And through appreciation, you could make a large profit when you decide to sell the home.

Have kids? A holiday home is a great way for your kids to test out living by themselves, before they actually venture into the world to do just that, and pay a fortune in rent every month. Once you decide to retire, your holiday home might be a great place to stay.

If you are thinking about buying a holiday home, these are some of the benefits, not to mention the beautiful, warm memories with your family you will treasure for a lifetime.

Cons of buying a holiday home

While a holiday home can be an amazing investment, it is important to consider the risks, or the con’s if you like, of buying a home on WA’s coastline.

Think about holding costs. If you can’t find a tenant to live in the house while you aren’t, you still have to pay the mortgage, maintenance, and repair costs, all while gaining no income from it. And it can be hard to find tenants outside of popular holiday times, and when they are easy to find, it’s during the time you want to holiday in the home!

If you are renting it out as a short-term stay holiday house, demand can be unpredictable, especially in the colder months. But if you decide to have a permanent tenant all year round, you won’t be able to spend your holidays in the home. It is not easy to get someone to agree to live in the home during only some parts of the year.

As with any investment, there is the risk that the property value may not increase, and it could even decrease, leading to a financial loss on your part. Make sure you are in a good financial situation before investing, just in case things go pear-shaped.

And of course, there is the possibility that you will get bored of going to the same place year after year, and your kids could get bored of it too.

These are some of the things to think about when investing in a holiday home for you and your family, it’s always a good idea to be cautious.

This blog post is the intellectual property of Peter Taliangis of Professionals Fremantle and is being used on this site solely as a representation of my work.