Over the last few years, the number of people investing in vacation homes has more than doubled, according to the National Association of Realtors. If you’re one of the many homebuyers considering a vacation home, there are some important considerations to make before jumping into a purchase.
Whether you’re looking to slip your toes in the sand or want to wake up to beautiful mountain sunrises, you should consider more than just your personal preferences when choosing the location for your vacation home. This is particularly true if you’re thinking about renting out your property for additional income. You’ll want to select a good location that will attract renters. On another note, if you choose a property near the water, you’ll want to know about flood zones and other specific concerns pertaining to waterfront homes.
Before you buy a vacation home, you’ll want to factor in all of the costs associated. Remember, you will likely be maintaining two residences and your vacation home may have a higher interest rate since it is not your primary residence. Calculate how much you will need to spend each month for: utilities, HOA fees, maintenance, repairs, landscaping, taxes, insurance, etc.
Even if you are renting your home out and bringing in some revenue, part of that money will need to go back into maintaining the home. Be realistic about what you can afford.
Tax treatment for vacation homes is different than for your primary residence. Talk to your accountant or financial advisor about the tax consequences for owning a secondary home before you buy.
Management is very important to consider, especially if your vacation home is too far way for you to maintain yourself. Whether you choose to have the neighbor watch your property when you’re away or hire the professional services of a property manager or management company, make sure you have a plan for how you will protect your asset.
Deciding to purchase a vacation home can be a fabulous investment and the perfect way to escape from the daily grind. Just make sure you have taken these tips into consideration before making the plunge. Here’s to happy vacationing.