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Investing in holiday homes

Author: In summer, Western Australia’s popular tourist spots present a solid option for people thinking about investing in holiday homes.

In particular, places like Dunsborough, Denmark, Dongara, Lancelin, Cervantes and Albany see a lot of investment activity.

Investment opportunities

The holiday investment most people would prefer to enjoy is a home that is always available for short stays.

However, holiday investments are not the inexpensive country option they once were – particularly along the coast, so this isn’t always practical.

Instead, these days it has become increasingly common for buyers to choose to combine the purchase of a holiday home with long term investment plans.

In places where demand for rental accommodation is seasonal, such as fishing towns, windsurfing spots and agricultural areas, there is a greater likelihood of vacancies for rental properties outside the peak holiday or industry period.

However, the rentals are normally much higher in properties leased for short periods and this can partly offset the loss of income when the place is vacant.

The benefit of this strategy is that you can then take advantage of the seasonal rental market by using the property in the off-season.

Units in resort developments

Another option is to purchase a unit in a resort development.

Some resort operators will guarantee a rental income for a fixed period. In many cases the purchaser is acquiring a share of a managed investment scheme, which includes a stake in the total income and expenses incurred by the resort.

The most important consideration when buying a holiday home is to set aside the emotional reactions and approach the purchase with a clear understanding of its real value, the ongoing costs and likely rental income.

If you are travelling around the state this holiday season and perhaps thinking of a holiday home investment, why not drop into the nearest Rodi agency office and talk to staff about opportunities?

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