Property is now perceived as an investment, alongside shares and gold as a commodity which will increase in value. The recent ups and downs of the property market only serve to highlight the value of property, as with shares and gold, can go down as well as up.
Considering the future value of a holiday home or second home before purchase and having a plan for disposal or an exit strategy is something that not many people do. However, it can be an opportunity and raise issues so consideration at the outset can save in the long run. Here are a few of the key considerations:
Is the area on the up?
You research an area for factors including falling crime figures, significant inward investment in business and infrastructure and commerce. The local or regional tourism group may be able to provide statistics into visitor numbers: are they increasing or decreasing? Are there some celebrity connections to the area?
Is the property being sold ‘below market value’
Property auctions can be a route to a bargain but are often the reserve of neglected stock in need of renovation.
Buy at the bottom of the market
Buy when is the bottom of the market? This is the magic question to which no-one knows the answer for certain. Waiting for the ‘right time to buy’ could lead to many years of monitoring activity and an area.
What is the exit plan?
- Pass on in the property upon death in a will.
- Sell after a fixed amount of time, dependent on personal circumstances such as retirement or the age of children.
- Sell when the market is healthy and a profit can be made.
- Sell at the point where the property is trading healthily as a holiday let.
Interestingly only one of these strategies considers selling the holiday home to make a profit on the buying and selling of the property.
All of these considerations do not factor in the emotional attachment buying a holiday home can have with its owners. There are two sides to holiday home ownership, the emotional and business influences which come with ownership. Separating them out can be hard...
