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Buying a holiday home? Consider these 5 factors

23 Nov 2015

As the year draws to an end, many will start making plans to go on a holiday trip and spend some time in South Africa’s top leisure destinations.

This three bedroom house in Royal Alfred Marina, Port Alfred, has two living rooms, a private jetty and patio. It is selling for R4.15 million - click here to view.

Apart from taking some time off from a busy schedule to refresh for the year ahead, it is also an excellent time for property buyers to get a feel for the market in these destinations, especially if they have plans to purchase a holiday home.

This is according to Warwick Heny, Broker/Owner of RE/MAX Kowie Port Alfred, whose office is halfway between East London and Port Elizabeth on the Sunshine Coast.

He says with the property market continuing to improve, it is expected that there will be higher demand for holiday property this year than last.

“As large numbers of inland holidaymakers make their way to the coastal regions during the months ahead, we can expect to see the number of property transactions within these areas increase,” says Heny.

Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, says those who have access to 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.

He says 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 buy a leisure property there are several aspects that buyers should consider before deciding to commit financially.”

Heny shares a few factors that buyers need to consider before purchasing a leisure property:

1. Affordability

Before buying a holiday home, buyers need to be sure of monthly holding costs, which include rates and taxes, insurance, maintenance costs, and even travel costs to get to the holiday property.

They should also consider any improvements they may want to make and the costs of this when looking at various homes.

This is to make sure that they buy the right property and expenses are kept to a minimum. A holiday home should provide a place to relax, and not be a source of stress and financial strain, says Heny.

2. Position

This six bedroom house in Royal Alfred Marina, Port Alfred, offers an open-plan living area, patio and private jetty. It is on the market for R3.75 million - click here to view.

Henly says as with any property investment, location is highly important, and buyers should ask themselves a few questions regarding the property’s position.

Will the position of the property be suitable for their needs as a family versus the investment value they are making? Should they pay more to be on the front beachfront road, for example, or rather spend 30 % less for a similar property further from the beach?

Is the road to the property tarred or in good or bad condition, and what impact is this likely to have on the value of the property? Are the surrounding homes in good condition and are they lived in permanently or not?

3. Accommodation

Heny says apart from location, another important aspect is the set-up of the home. Think about whether the property meets the needs of the family. Are there enough rooms or space for friends of the family to also stay over if necessary?

4. Resale potential

Will the property appreciate in value or not, and will the buyer be able to recover their investment should they need to sell for some reason?

This will be largely determined by the property’s location, along with the level of maintenance of both the home and the nature of the area itself, says Heny.

5. Can it generate an income?

Would the holiday home be popular for weekend and mid-year holiday rentals, and therefore generate income to help pay for the holding costs?

Heny says while 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.

Before buying a holiday property, the buyer will need to establish whether the cost of owning and maintaining the property is worth their while.

He says buyers who are looking to purchase a leisure home should work with a professional, reputable agent who has lived in the town for a long time and who can provide useful and sound advice on the area and a specific property.

According to Heny, the area they service is a good location for those who wish to invest in a holiday home.

“We operate in Port Alfred and Kleinemonde, a small resort village about 12km to the east of Port Alfred. We expect good demand for beachfront holiday duplexes as they are well priced and generate rental income,” says Heny.

We are also expecting high demand for well-priced family homes in the suburbs that can be let out year round when not in use by the buyer.”

He says as the area is a student town, buyers can purchase property and collect fairly good rental income between February and the end of November from students or staff at the International Hospitality University called Stenden, as well as students or employees of the well-known 43 Air School.

At the top end, he says the Royal Alfred Marina is always popular for families looking to relocate and secure long-term investments which initially serve as a holiday home, but often become permanent homes as the buyer retires or decides to commute to the city for work on a weekly basis.

Heny says during this holiday period, two bedroom apartments priced from R600 000 to around R700 000 should be a popular choice among holiday home buyers, along with homes in higher price brackets, provided they are perceived to be good value for money.

“Fortunately for buyers, Port Alfred offers exceptionally good value at present. In the Royal Alfred Marina, buyers can secure great properties between R3.5 million and R4 million.”

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