The term ‘Lifestyle Property’ usually springs to mind with coastal properties that investors can spend their summers in and rent out for the rest of the year. However, Lifestyle Properties offer a lot more than this! Lifestyle Investment Property is a term used whenever the investor wants to find a balance between investment and lifestyle improvement by renting out their properties on a short let basis, and occupying it themselves during other time periods.
What is a ‘Lifestyle Property’?
Lifestyle Investment Properties can be positioned anywhere, whether it be the coast, city or rural areas. The term ‘lifestyle property’ refers to a balance between investment and lifestyle. You can rent out a property on a short let basis, and during other periods live there yourself.
What are the risks?
Lifestyle properties have similar risks to all types of investments. This is why when looking at any type of investment, property or shares, it is important to research the investment yourself and choose an investment option tailored to your expectations. In the property market, researching the area and the market of your potential property is crucial to making a wise investment choice.
What is the return like on lifestyle investment properties?
Lifestyle investment properties are generally thought to not have such a strong return as other investment properties. Many factors go into return rates, which makes it difficult to draw a comparison between lifestyle properties and other types of investment. Based on factors such as location, developing infrastructure, and property demand at that time a lifestyle investment property may perform either better or worse than another property type. Like all investment properties, your returns are partially reliant on the factors affecting the property at the time.
It is important to decide what your investment goals are. If you are after a holiday home you can make income off during the year, and can be claimed as a tax offset, a lifestyle property may suit your needs. However, if you are after a more reliable source of extra income or investment, the more traditional type of investment property may suit your investment needs.
Lifestyle properties are often considered ‘optional’, and in a tough real estate market, these types of properties can be the first to suffer. In recent years, the Gold Coast and Sunshine Coast (prime examples of locations where people often purchase lifestyle investment properties) have softened substantially due to the global financial crisis. In saying this, these locations are currently offering some of the best lifestyle property opportunities as developers are offering massive price reductions in areas which in the medium term will improve in performance and some of the new properties being offered to the market are currently selling out within 3 months of hitting the market.
When is the right time to invest in lifestyle properties?
Purchasing at the lower end of the lifestyle property cycle is always best, as in these market environments, there are added incentives from developers. These can include, and are not limited to, rental guarantees, furniture packages and price reductions.
It can be hard to time the real estate cycle, but any type of investment property is a long term decision and it pays to research. Minimise your risk factors by determining if the area is growing, what type of returns you can realistically expect from a property, as well as how you will ride out any risks which may arise.
Lifestyle Properties – A Summary
- Lifestyle properties refers to any property that an investor chooses to both rent out on a short let basis, as well as occupy it themselves, offering a lifestyle balance with their investment.
- The strength of return on lifestyle investment properties depends on individual factors of the property investment such as location, infrastructure and property demand.
- Right now is a good time to invest in lifestyle properties, with developers offering added incentives on their coastal stock in particular.
The future trends of lifestyle property investment is hard to predict, however an industry professional will be able to help you navigate the factors that will best indicate what kind of return you can expect on your individual lifestyle property. For more information on lifestyle investment properties, contact LV Prestige today.