Want to buy a Main Beach Holiday Apartment?
Holiday season in Main Beach is busy and exciting and creates some wonderful memories for families and couples. Activities include: our beaches, sunshine, The Broadwater, attractions, theme parks, restaurants and resort facilities. In the last month or so I was repeatedly asked to show property to holiday-makers who are obviously enjoying themselves and thinking about buying a holiday apartment. The intention of course is to use the apartment themselves when visiting the Coast and rent it out as holiday let at other times.
There is a lot to consider and buyers need to ensure they are buying with their head and not their heart. Consider the investment fundamentals and what you need to achieve to make the investment work for you.
Main Beach is certainly a prime location but even so seasonal fluctuations will ‘affect’ your return. As we are a beachside locale, occupancy will be strongest during summer and the returns can be very strong during this time particularly for those properties located on the beach or those with water views. Peak season in Main Beach generally runs for approximately 12 weeks across Christmas. During the off season and during financially bleak times properties in less superior locations can suffer poorer returns. Be mindful that this peak season is going to provide a large proportion of the annual income generated by the apartment but these are the times you are likely to want to use the apartment yourself. If you are going to require consistent returns to make the investment work for you a longer term permanent tenancy may be the best option.
Main Beach is blessed with a multitude of restaurants and cafes and major attractions nearby. The Gold Coast is world renowned as a tourist hotspot so Main Beach has much to offer holiday-makers. Transport has also improved with the construction of the G-Link light rail system.
Main Beach also has the good fortune of hosting several major events throughout the year including the GC600 V8 super car race. Unit occupancy is strong through these periods also. Main Beach is a prime location for a holiday rental. Not that anything is too far away at all but if you do purchase a property further back from the beach it may be best to consider placing a permanent tenant rather than holiday letting.
Main Beach holiday let buildings are all self-contained and generally have larger rooms, bigger kitchens, separate laundries and ample bedrooms and bathrooms. This not only solidifies your returns but generally is the basis for stronger capital growth. The time may come where you are looking for a lifestyle change and this will give you the option to move in yourself.
Seek out excellent management with experience and a successful track record in holiday letting. In recent years management rights have been purchased by retirees with superannuation payouts and no real experience. An experienced and professional manager can be the difference between having your apartment empty or occupied.
The gross returns on a holiday apartment are much greater than permanently let properties but the costs are also much higher sometimes making your nett returns less attractive. Management fees are much higher (in the vicinity of 12-15%), as opposed to the average of 8.25% for permanent letting. Maintenance costs due to extra wear and tear are much greater and replacement costs of furnishings and appliances need to be considered. In my experience this runs to approximately 3-5% of income. Other costs such as laundry, linen hire, Foxtel, cleaning and advertising will be mandatory costs to be deducted from the income. Total costs to be deducted from the gross income often comes in anywhere between 30-50%!
I would recommend an analysis of returns for holiday letting your new apartment vs long term letting. The end result may influence your investment decision. If you are thinking about the property as your retirement home and not necessarily your holiday home this analysis will be particularly useful. A longer term tenancy will give you the option of renting vacant or fully furnished, reducing costs again and maybe providing better nett returns than holiday let.
If you are considering utilising the apartment yourself at times you must also consider the tax implications. A pro-rata deduction may need to be made for the time you used the apartment yourself. You should be able to claim deductions, including operating costs, interest expenses and depreciation. If certain criteria is met you will be able to claim a higher/faster rate of depreciation on a holiday let apartment.
If you are wanting to holiday in the apartment yourself, be mindful of this when signing your agreement with the management. Some agreements have a maximum number of weeks (usually four) or times you can do so. This is negotiable and you should alter this in your agreement if necessary prior to signing.
Experts are touting the Gold Coast as an excellent place for investment simply because capital gains are expected in the future.
Major infrastructure investment is being made, development is healthy, major advancements in the local health and education sectors are occurring and the 2018 Commonwealth Games are soon. All of these components add up to a positive landscape for property investment in general and Main Beach’s location well and truly places us somewhere at the top of that list.
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Posted By Shelley Fuller on Friday 4th November 2016 @ 17:13:24
Updated : Friday 4th November 2016 @ 17:15:48 | Words : 882 | Views : 1596 | Comments : 0
Holiday season in Main Beach is busy and exciting and creates some wonderful memories for families a . . .
Posted By Shelley Fuller on Friday 4th November 2016
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