Read these 5 Tips to choosing the right holiday home:
As the year winds down, many South Africans will be making plans to spend some time in the country’s top leisure destinations over their holiday period, says Adrian Goslett, CEO of RE/MAX of Southern Africa. He notes that this is the ideal time of year for buyers to get a feel for the property market in these areas, especially if they are planning on acquiring a leisure property.
“As the momentum within the property market continues to gain traction, it can be expected that the demand for holiday homes will gradually start to increase, which means we are likely to see slow but steady growth in the leisure property sector of the market,” says Goslett. “With the large number of inland holidaymakers visiting the coastal regions during the months ahead, we can expect to see the number of property transactions within these areas increase.”
Goslett notes that areas like the Atlantic Seaboard in the Cape, the Garden Route and the KwaZulu-Natal north coast are likely to see an increase in demand for luxury and leisure properties, as are the Big-5 areas in the northern regions of the country.
“Those who can access the necessary finance can escape to a second home that is away from the hustle and bustle of city life to enjoy the lifestyle benefits these types of properties offer,” says Goslett. “With the numerous leisure hotspots through South Africa, buyers are spoilt for choice when it comes to choosing a location in which to purchase a holiday home. There are several locations that offer buyers a range of properties in a variety of price brackets throughout South Africa.”
He adds that property is considered to be a strong asset class in which to invest, particularly over the medium to long term. A leisure property can prove to be a home to enjoy as well as an investment that generates healthy returns. “However, as with any property investment, when looking to purchase a leisure property there are several aspects that buyers should consider to before deciding to commit financially,” advises Goslett.
He notes that buyers need to look at the key factors that will impact on the property’s investment potential. Goslett provides the top five tips that holiday home buyers should consider carefully:
1. Location
The importance of location should never be underestimated. “It’s not anything that hasn’t been said before, but location remains ever important. Buyers need to ensure that they research the area and establish the level of property appreciation it has achieved over the past year. Other factors to consider are how well maintained the area and its facilities are, as well as the general market conditions prevailing in the suburb,” says Goslett.
2. What the future holds
Goslett advises that property should ideally be viewed as a long term investment, so buyers should not just look at the area as it is now, but must take into consideration the future plans and possible development in the future. He notes that where possible buyers should find out what infrastructure or development is planned for the region, along with zoning and transport routes or nodes that may affect the tranquillity of the area.
3. Finance position
“A holiday home should provide you with a place to relax, and not be a source of stress and financial strain. Before venturing into any leisure property investment it is imperative for holiday home buyers to consider their financial position, paying particular attention to the acquisition costs such as a deposit, transfer fees and conveyancing fees,” says Goslett. “Other aspects that also need to be considered are the impact of possible interest rate increases, ongoing monthly maintenance, security and insurance costs as well as the rates, taxes and utility tariffs in the area.”
4. From a distance
According to Goslett, holiday home buyers should also consider the practical implications of owning and managing a property in a different town. “It might be necessary for the owner to hire a professional property management company that can conduct regular inspections and screen, select and place tenants. These fees need to be added into the overall budget,” advises Goslett.
5. Use it or lose it
Although it is possible to receive a rental income from a holiday home during the times when the owner is not using it, there is little point in keeping a holiday home that is seldom or never used by the owner. Goslett says that before purchasing a holiday property, the buyer will need to establish whether the cost of owning and maintaining the property is worth their while. It is far better to focus on paying off a primary residence, than it is to incur debt on an additional property that will not be used very often.
“As with any property purchase, a good investment decision will be based on the buyer doing all the necessary homework and comparisons. Buyers must be sure that the investment they are making is worth the financial commitment they are laying down to acquire it,” Goslett concludes.
Alan Straton
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