Planning to buy a vacation home? Here are four things to consider before you sign.
The very idea of owning an exotic vacation house has a glitzy charm of its own. Who wouldn't love to own a second home in a place where they can commune with nature, feel the fresh salty sea breezes, or take in majestic mountain views, right?
Maybe owning a vacation home has been your dream for longer than you can remember. Or, maybe you’ve already decided to take the leap and invest your time, energy, and (most importantly) your hard earned money into a second home.
Have you? If your answer is yes… Stop!
Investing in real estate is NOT only about sensations and aesthetics, there’s money involved, and lots of it. Just as you would do with any real estate deal there are some serious ground realities to look at before you pick your dream vacation home.
Before you sign that dotted line and have a new property transferred in your name, there are a few things to consider.
The Fantastic Four of Vacation Home Investments
Below are the 4 main things to consider before buying a vacation house. Read and reflect. Then rinse and repeat until you are confident you understand the commitment and are ready to begin the search for your dream second home.
1) Can You Afford It?
Believe it or not, just last year the real estate industry saw 44% growth in the sales of vacation homes across the US.
One thing is clear; the demand for vacation properties is high and the market is on the rise.
With the demand at an all-time high already, are you sure you can afford the investment?
Before you make a life-changing decision, become familiar with all the extra costs involved with owning a vacation house.
Apart from the purchase price, there are various others costs to deal with, including:
Additional purchases like jet skis, motorboats, and other necessary amenities common for a vacation home will also contribute significantly to the total cost.
So, can you really afford everything? Think about it.
If you want to avoid buyer's remorse later on, talk to a real estate expert and consult their expertise to help give you a clear, realistic understanding of your actual budget.
2) Let's Talk Rentals
If you're looking to buy a vacation home from the investment perspective, check if there is potential for rental income at all.
Get familiar with the prevalent rent rates in the market and see if they'll cover your monthly costs.
For financing, tell your lender that you plan on renting out the property. This way their plan is in line with the laws for rental vacation homes, which can differ from those pertaining to standard real estate transactions.
This is absolutely important to consider.
Do you want to spend your vacations in a quiet, serene place or would you rather spend time in the middle of a vibrant city?
It all depends on your personal choice. But make that choice consciously.
Also consider the distance from your primary residence to the vacation property.
Should it be just a quick drive from your primary residence or would you be okay with traveling longer distances?
Asking yourself these questions before you start looking for your dream vacation home will make your search much easier.
4) Who Watches the House in Your Absence?
It’s a vacation home for a reason. So, who is going to look after your property when you're away?
Leaving your home away from home unchecked for long periods will not only increase the risk for theft or vandalism, but any unnoticed leaks or frozen pipes can also cause serious damage, costing even more money to fix!
If you intend to rent out to other vacationers, keep in mind that expected comforts (food, TV, medicine, etc.) will be necessary as well.
Can you take on that added responsibility? If not, consider waiting until you can or hiring a property manager to handle daily upkeep for you - and for your peace of mind!
Now Is the Time to Invest!
As mentioned, people are looking for vacation homes more than ever before and the market is seeing a boom.
Once you've given all of the above proper consideration and have decided on a clear and realistic plan, it’s time to invest!