I’m not sure about you, but when I go on holidays, one of the things I nearly always do is look at the Real Estate boards.
On the eastern seaboard especially, property developers and spruikers know this, and there are endless displays designed to lure off guard holidays makers into buying into schemes such as time share.
Linda and Adam are one such South Australian couple, who came home from an island holiday off the QLD coast proud owners of a timeshare unit in a resort. The aim was that they were able to have a nice holiday each year.
Because of the time share investment, the developers kept in touch with Linda and Adam and invited them to further purchase an apartment outright off the plan in a new development on the same island. Growth had been outstanding over the last few years, and rental from holiday makers would cover loan repayments. They could go on holidays and stay at their time share knowing that they also owned a rental property on the Island. What could go wrong?
Well, property prices on the island collapsed. Because they went interest only they owe more on the property than its current value, and they can’t sell. The bank has them stitched up with cross security which has soaked up a lot of equity they have in their home.
I met with Adam and Linda recently. They are in their mid-50’s and really want to slow down at work but can’t see themselves doing so until property prices go up significantly.
It’s not too late for them to create a plan to retire comfortably, but it’s not going to be easy.
Debt is a double-edged sword; amplifying both gains and losses, and needs to be paid off eventually.
Property can be a great investment, but you need to spend the time to do your research and buy the right property, in the right place, at the right price.
Beware the holiday home.