The Kiwi dream: Your ultimate guide to buying a bach

The sound of the waves on the coast, the stillness of a lake at dawn, the smell of a pine forest; for many of us, owning a bach is the ultimate Kiwi dream. It’s not just a property - it’s a haven for family memories, a well-deserved escape, and a potential slice of financial opportunity.

But is buying a bach the right move for you? And how do you navigate this unique part of the property market?

At Naked Finance, we’re here to strip back the complexity. Let’s explore the key things every Kiwi should consider before taking the plunge on a bach.

Step 1: Be honest about your "Why"

Your motivation is the foundation of your entire bach-buying journey. Getting clear on this will guide your budget, location, and property type. Ask yourself:

Is it a family retreat? Is your primary goal to create a permanent, debt-free holiday spot for generations? If so, sentimental value might outweigh financial return.

Is it an investment? Are you planning to rent it out on platforms like Bachcare, Bookabach or Airbnb to help cover the costs? This requires a different strategy, focusing on rental yields, occupancy rates, and property management.

Is it a future retirement home? If you plan to retire there one day, you’ll need to consider long-term factors like accessibility, healthcare, and community.

Understanding your core driver is the first and most crucial step. 

Step 2: Look beyond the price tag – The hidden costs of bach life

It’s easy to get fixated on the purchase price, but the ongoing costs can be a steep surprise. Some factors that need to be budgeting into your decision include but are not limited to:

Rates & insurance: These can be significantly higher in coastal or remote areas due to specific risks like erosion, flooding, or limited fire services.

Maintenance: Bachs often bear the brunt of salty air, strong winds, and long empty periods. Budget for regular maintenance, and consider the cost of a property manager if you live far away.

Utilities: Power, water, and internet might require alternative (and more expensive) solutions like gas bottles, tank water, and satellite broadband.

Furnishing & setup: Unlike a primary home, you’re often starting from scratch with furniture, linen, and all the essentials.

Step 3: The location & logistics conundrum

The perfect bach location is a balance of dream and reality. Whichever way you sway, having due diligence over your decisions is paramount to any successful purchase. 

The 3-hour rule: A common rule of thumb is that a bach within a three-hour drive from your main home will be used far more often than one that requires a long journey.

Do your due diligence: This is non-negotiable. For any bach, you must check:

Title and land: Is it freehold, cross-lease, or leasehold? Is there any risk of erosion or slippage?

Building report: Never skip this. Bachs can have hidden issues from weather-tightness to old wiring.

Council files (LIM Report): Check for any consents, future development plans, or land restrictions.

Community vs. seclusion: Do you want a bustling holiday community with neighbours close by, or a totally private, off-the-grid escape? Each has its pros and cons.

Step 4: The financial nuts and bolts

Financing a bach isn't always the same as financing your primary home.

1. Using your equity: Many Kiwis use the equity built up in their main home to help finance their bach purchase. This can be a smart way to access a deposit.

2. Deposit requirements: If you plan to rent out the bach, lenders may view it as an investment property, which can sometimes require a larger deposit (e.g., 30-40%).

3. Loan structure: Your mortgage structure needs to be optimised. Should you have a separate loan for the bach? How will rental income be factored in? This is where tailored advice is essential.

4. Tax considerations: If you rent out the bach, you must declare the income and can claim related expenses. It's wise to talk to an accountant to understand the implications.

Ready to make the bach dream a reality?