holiday rentals properties that help pay their own way

Written by The ReReport

REGULAR weekends in the Blue Mountains were relaxing for Carly Steggles and Euan Rodger, but their savings were getting stressed from spending up big on accommodation.They had been considering buying an investment property, so decided to buy a holiday home, where they could stay on occasional weekends and rent it out at other times.FIND OUT IF YOUR PARTNER IS BAD WITH CASHBANKS TRICK SAVERS ON INTEREST RATES“We knew Blackheath quite well and liked the village,” Mr Rodger said. “With the newly upgraded road, access was better than before, which I thought was a good sign from an investment point of view.”The couple scored a 10 per cent discount from a motivated seller, which freed up renovation funds.The property had to be fully financed with a 20 per cent deposit secured on equity from another asset.media_cameraThe Lodge at Blackheath is in fine form after a renovation.media_cameraNature is your neighbour in the Blue Mountains.“It had been a holiday rental, so we were able to get the details of the income it generated and we also had a rental valuation carried out, (which) helped obtain the required financing.”Once purchased, they quickly got to work.Renovating and furnishing took $60,000 and two months of working every weekend. When ready to rent out, they began with a low asking price.“Many of the people who stayed in the first year are now regular guests, so it was a good plan,” Mr Rodger said.“Since then, we’ve experimented a little and found the right price. It’s rented out most weekends and occasionally a longer stay.”Property investors have had a tough time recently, with banks tightening lending and hiking interest rates. But there are opportunities in the holiday market, with risks attached, said SQM Research managing director Louis Christopher.“You’ll generally find a more affordable entry point,” he said.“The issue is the areas are often dominated by investors, which makes the market more volatile. During bad times, values may move downwards more quickly.”He said areas with a mix of owner-occupiers living locally – rather than only holiday renters – were less risky.Meanwhile, Mortgage Choice data shows investment loans are taking longer to process as banks intensify scrutiny of applicants. Lenders should limit spending in the months leading up to applying, Mortgage Choice CEO Susan Mitchell said.“There is a heightened focus on each home loan applicant’s living expenses,” Ms Mitchell said. “Lenders are asking to see data on three to six months’ worth of spending in order to determine an applicant’s ability to service a loan.”Originally published as Holiday homes can be cash cows

Source link