Sarah Wells – ‘Your Money’ The West Australian
Finance and Money expert
Forget renting a holiday home, here’s how to buy your own
Along with thoughts of chocolate and taking some time out with family and friends, the Easter holidays often involve planning to rent a holiday home for the break.
But what if I told you with some strategic planning and discipline, you could actually work towards buying your own?
Here are my three tips, three traps to avoid and a habit to cultivate to help make your holiday home dream a reality.
Let’s start with the three tips to work towards buying a holiday house:
1. Start with a clear budget and savings plan
Begin by establishing a clear budget that accounts for your income, expenses and how much you can realistically save each month towards your holiday home.
Consider opening a savings account specifically for this goal to keep your funds separate and avoid the temptation to spend them.
Research the real estate market to get an idea of the cost of holiday homes in your desired location and use this information to set a tangible savings target.
2. Invest wisely
Investing your savings can help grow your funds faster than a regular savings account.
Look into low-risk investments such as bonds, mutual funds, or even real estate investment trusts that focus on property investment.
Make sure you do thorough research or consult with a financial adviser to choose investments that align with your risk tolerance and timeline.
3. Consider alternative financing options
Explore different financing options beyond the traditional mortgage. This could include rent-to-own agreements, owner financing, or joining a real estate investment group.
These options might offer more flexibility or lower upfront costs, making it easier to purchase your holiday home.
And here are the three traps to avoid:
1. Overlooking additional costs
Don’t forget to account for additional expenses such as property taxes, insurance, maintenance and any homeowners association fees. These costs can all add up and impact your budget significantly.
2. Impulse buying
Avoid the trap of falling in love with the first property you see. Take your time to explore different options and make sure the property meets all your needs and stays within your budget.
3. Neglecting location research
A common mistake is not researching the location thoroughly. Consider factors such as climate, accessibility, property value trends and the potential for rental income if you plan to rent out the property when you’re not using it.
Financial discipline is a habit you’ll need to cultivate to reach your goal of owning a holiday home.
Developing and maintaining financial discipline is key to achieving any long-term financial goal. This means making conscious decisions about spending, saving and investing.
One effective habit is to regularly review and adjust your budget, savings plan and investments to ensure you are on track towards your goal.
Automating your savings to different accounts can also help by ensuring a consistent portion of your income is set aside each month without requiring manual intervention.
By following these tips, avoiding common traps and cultivating a habit of financial discipline, working towards buying a holiday house can become an achievable goal, transforming your Easter holiday plans from temporary rentals to a permanent retreat for you and your loved ones, every Easter.
Sarah Wells is a Perth-based money and finance specialist.