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Why a home loan doesn't have to tie you down

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  • 3 May 2019

One of the biggest fears of the Millennial generation is being tied down to something that will get in the way of their travel plans. That’s why, according to the 2017/2018 Old Mutual Millennial Survey, 37% of millennials are more likely to save money first towards travel than any of their other expenses.

However, according to Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, having a home loan does not necessarily mean that you must live in it year-round. “There are several options available to homeowners who are out of the country for periods of time. For example, short-term letting and Airbnb rentals present useful solutions to the nomadic homeowner. In both scenarios, however, homeowners will need to make use of the services of a reliable property manager who can collect payment on the homeowner’s behalf and be available to address any maintenance issues the temporary tenant might come across while the homeowner is out of the country,” Goslett explains.

Usually, a standard homeowner’s and household goods’ insurance policy would cover a homeowner against unfortunate occurrences such as damage to the physical property and the furniture therein. However, managing these risks becomes slightly more complicated when the homeowner is both the primary resident and the temporary landlord. “Certain homeowner’s insurance policies might provide cover if you rent out your home occasionally, while others will require you to take out a separate landlord’s insurance policy. Similarly, some policies will cover furniture damage while the property is occupied by tenants, and others will not. Buyers will have to do thorough research on insurance policies to ensure that they are covered against these kinds of damages,” Goslett warns.

The other risk traveling homeowners face is the challenge of securing tenants for the period that they are away. “My advice to these kinds of buyers is to search for a property that has year-round appeal to the short-term rental markets. For example, suburbs near tourist hot spots will attract the holiday renter, which is often a seasonal market. If you plan to be out of the country over the peak tourist seasons, then these kinds of homes might be ideal. Suburbs near business districts, on the other hand, will attract those travelling for work, which is a more stable, year-round market,” explains Goslett.

While there are risks involved in leaving your primary residence in the hands of a temporary tenant, Goslett summarises the above by emphasising the importance of hiring a reliable property manager to look after your home while you are out of the country. “A property professional with the specified experience will be able to guide homeowners into making sure they avoid the major stumbling blocks involved in these kinds of arrangements,” Goslett concludes.

 

Original article from Private Property.