Property investors have been reminded about the dangers of purchasing an investment property in their favourite holiday destinations.
Aviate managing director Neil Smoli said during school holiday periods and the festive season it is all too common for people to invest in locations they particularly enjoy visiting. According to Mr Smoli, the emotional attachment to these locations and long-held retirement desires can cloud investors’ judgement.
“Many people, when considering investing in property for their future, think their favourite holiday destination is the ideal place for them to invest,” he said. “After all, if you love an area so much, why not invest there now so you can rent it out and retire later?
“Sadly, it almost never works out. Investment decisions based on emotion, clouded by what could be described as a summer haze, are typically doomed. What might seem an opportunistic purchase for the future will more than likely be regreted once the rose coloured glasses come off.”
Mr Smoli said even though many investors may be freshly motivated by New Year resolutions and be itching to purchase, research and investment fundamentals are still crucial.
“It’s the time of the year when New Year resolutions are considered and investing for your future, and the future security of your family, is perhaps one of the best resolutions you can make. However, a rushed, unwise investment based on emotion is often worse than not investing at all,” he said.
“Don’t make a holiday destination investment property the ultimate souvenir purchase you regret. Remember, you can always continue to holiday in your favourite spot and if you decide one day that you want to move there for good, you can always buy as an owner occupier.
“Of course, having this capacity will be made much easier if you take the right steps to secure your financial freedom today. Investing in properties with the potential to perform over the long term, in terms of rental returns and capital growth, is one of the most effective ways to achieve this.”