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Holiday property investment

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azamma | 16 Aug 2015, 01:19 PM Agree 0
Currently have 410k loan on our investment property, it would be valued above 820k. We owned our primary home of residence which propbably will be valued above 1.3m.
I m looking at some propery investement strategies and where we can invest.
We were looking at the entrance(nsw) as place to invest in. We also looked at some holiday properties in Magenta(nsw).

Thanks, Karl
  • Jai6363 | 26 Oct 2015, 09:35 PM Agree 0
    Good Evening Karl, firstly I'll state I have no formal qualifications in property investment or accounting. I have however had excellent success with investing in property over the last five years.

    Firstly with The Entrance, The Entrance has experienced extremely sharpe growth over the past 12 to 24 months. With almost 20% growth in the last 12 months alone. With limited infrastructure and investment in the area I do not assess that this growth pattern will continue. I assess that it will steady and see its average growth rate of around 0.8%. As a result, I would not be investing in this area.

    Secondly with Magenta, this has even less potential for growth, with a rental yield of around 3.5% this offers not much in the form of investment return. I would not recommend investing in Magenta. With holiday rentals, pending your income and flexibility with making loan repayments this could be an option however I'd need more information from you to provide and informed recommendation.

    The first and most important thing to remember when purchasing an investment property is to ensure that you do not let emotional attachment steer you towards a property. I assume you, by these locations that you are most likely from Sydney, and travel to these places with the family on weekends and in the holidays. These are amazingly beautiful areas, albeit you are about 24 months to late for The Entrance and Magenta offers little prospects for growth.

    The last two investment properties I purchased have both been "sight unseen". There was no emotion with my decision making. Just historic statistical data, research on infrastructure planned for the areas and the usual things to look for when buying an investment property such as public transport, roads, schools and shops. With this I have been very successful, this was due to hours spent researching areas, as well as a pinch of luck.

    Fortunately you are financially well off. If I was in your position, I would be looking at either purchasing one or two investment properties using the collateral you've built up on your already established investment property. This should (without knowing your income or employment position) also work in your favour for tax purposes. With you having assets in excess of 2m and only owing 400k the banks will throw them self at you to give you a loan.

    Personally I would look at seeking investment in two properties, the first area I would recommend you research is SE Qld "property triangle." This is effectively from Gold Coast, up to Sunshine Coast and out to Toowoomba. This area as under performed over recent years and most of the "who's who" of property investment are saying this should see good gains in the near to medium future. I personally just bought a place in Sippy Downs on the Sunshine Coast. The Sunshine Coast has significant infrastructure planned over the next 10 years so property should see around 5-10% growth. Rental yields are also pretty good up there. I bought my recent property for 490k, and I am renting it out for $550. I'm hoping for around 6% annual growth for the next five years. With this "Golden Triangle" usual things to avoid - Logan and Units in Gold Coast.

    For your second investment property I would recommend you (again I'm assuming you are from Sydney) a little closer to home for you, and that is Kincumber. With a median house price of $550K, a rental yield of 4.5%ish and average annual growth of 7% it is low risk that should produce long term success. Any of the surrounding suburbs going towards Gosford or Woy Woy should generate similar returns.

    As you are financially secure, I'd also ensure you diversify your portfolio. Real estate is not immune to losses. If do some research and have a look at pushing some money into managed funds.

    Take aways from the above, don't let your emotions pick your investment property, look at the numbers and assess the potential for growth. Otherwise you may end up losing after you pay stamp duty and the other associated fees when purchasing a property. Secondly diversify your portfolio. Don't pull all your eggs in one basket.

    Good luck mate! I hope to have a look back on here in a few years and read your success story!

    Kind regards,

    Jai
  • FinanceRaffles | 07 Apr 2016, 12:58 PM Agree 0
    I also would want to invest on Holiday properties because our family is fond of going out for a vacation every year and this could mean an asset and a business to us. By the way, I think, this kind of investment can provide great returns if managed effectively. The adding appeal of a holiday home is the new tax applying to buy doesn't affect holidays homes.
  • AnnaDanishek | 19 Apr 2016, 10:08 PM Agree 0
    Spain is the best option I guess
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