What to consider when buying a holiday home in South Africa

Buying a second property as a vacation spot or for investment may sound really exciting; but the reality is that it often comes with its own set of challenges that might take some of the fun out of it.

This is the view presented by Samuel Seeff, chairman of the Seeff Property Group, who said that maintaining and looking after another property far away can be difficult, both in terms of time and finances.

“The benefit of a second home is that you could rent it out to other holidaymakers for extra income, but then risk additional wear and tear on the property,” said Seeff.

“You could simply keep it for your own holiday exclusively, but then it sits for most of the year unused. However you choose to use the holiday home, there are pros and cons to owning one,” he added.

Therefore, he advises potential buyers to always evaluate the pros and cons carefully before making the big financial commitment.

Pros and cons

Seeff explained that a major benefit is the flexibility to visit at your convenience, whether it’s for a weekend retreat or longer stays.

There’s no need to book ahead or deal with expensive peak season rates.

Additionally, you can rent the property to friends and family, generating extra income or covering maintenance expenses. In the future, it could even serve as your retirement home.

On the other side of the coins is that there will be a cost attached to owning the property.

Aside from the general property taxes and utilities, there will be security and maintenance costs.

Even if you rent the property out for some extra income, usage and potential damage or breakages could add to the maintenance costs.

Research

“Once you commit to purchasing the property and signing the offer to purchase, you cannot simply back out [thus] investing in a second home therefore requires the same research that you would do when buying a home to live in,” said Seeff.

He said that it is important to make sure that you check the average prices in the area so that you do not overpay.

If the aim of the purchase is to rent the property out, check that there is demand in the area and what rental income you can expect.

“If you need to earn enough rental income to cover expenses, ensure that you budget for those including aspects such as agency commission, cleaning and garden services, and utilities,” said Seeff.

“You will also need to budget for maintenance, especially in coastal areas which may require additional costs to maintain,” he added.

Holiday versus residential home

Seeff said that it is important to recognise the key differences between a property that you would buy for your own use, and a property that holidaymakers will want to rent.

A secluded property may lack the appeal of one near the beach or with breathtaking views, so it’s important to make a strategic decision rather than an impulsive one during your holiday.

If you find a property online that interests you, Seeff said that it is wise to visit the area and enjoy a stay there first to ensure it’s a sound investment.

Managing a holiday home remotely can be challenging and time-consuming, and you’ll likely need someone local to oversee the property or a rental agent to handle day-to-day tasks.

In case of issues at the property, having someone nearby who can respond quickly and provide expert advice is crucial.

For maintenance, this person or agent should have reliable local contacts to ensure the job is done properly and within budget.

A rental agent is also recommended if you plan to rent the property out, as they can assist with tenant sourcing and managing cleaning and upkeep.

Seeff also said that whether the holiday home is mostly for own-use, or you are renting it out (even in part), then it is advisable to visit it at least a few times a year.

“Aside from ensuring it is a worthwhile investment, this will provide an opportunity to inspect the property, and take care of any cleaning or maintenance requirements,” he said

Additionally, you will need to set aside a budget so that you can meet the maintenance needs.

“Holiday rentals are seasonal, and it is advisable that you budget and plan correctly to ensure you are able to meet the bond payments as well as associated property costs,” added the chairman.

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