Most Americans love going on vacation. As a matter of fact, some of us start planning the next one as soon as the previous one is complete. And these days, with the internet, it’s easy!
Many travelers enjoy going to a different destination every time they plan a trip, but many of us have favorite destinations that have become like our second home.
Perhaps that’s you and maybe you’re tired of trying to find that ideal rental in your favorite spot (or spots) and have begun to think seriously about buying a second home in that locale, especially if you tend to visit for several months at a time. A purchase such as that is a big step and not a decision to be taken lightly. There’s lots to think about before you make that decision to buy.
Can you really afford it?
While the numbers might work out in regards to the initial purchase of the property you’re considering, remember that the actual purchase price is really only a small part of the expenses involved in owning a vacation home.
Will you need to furnish your new home? Unless you’ve purchased it already furnished, you need to account for buying everything from large items like sofas and beds to the smallest kitchen utensil and plants for your window sill. That’s a huge added expense.
How about homeowner’s association dues? Landscaping costs? Or what about “toys” like beach chairs, kayaks, and surf boards for those warm-weather homes near the water or skis and ice skates if you’re heading to the mountains or other cold-weather resort areas? Oh, and maybe you’ll need an extra car to drive while you’re at your vacation home. Include that, as well as the insurance and maintenance you’ll need on that car.
It all adds up so make a list of what you’ll need before you sign on the dotted line.
Will you visit often enough?
As you consider buying a vacation home, ask yourself if you’re simply temporarily enamored with the destination you’re considering or if it’s truly a place where you’ll want to spend lots of time. You’ll need to want to visit OFTEN in order to make the purchase worthwhile. Furthermore, you’re not going to want to leave the home unoccupied for long stretches at a time, so think long and hard about whether or not your lifestyle and income will allow you to make those frequent trips.
Investigate rental options
If you’re gung-ho about renting your vacation property when you’re not there, be sure you ask your agent about any rules pertaining to renting. In some developments, renting simply isn’t allowed. Other subdivisions may have other rules about rental length (you can only rent if for 6 months at a time minimum, for example) and age of the renters. So, if you’re really going to be relying on the rental income when you’re not there, be sure to make it clear to your agent from the start so that you’re not wasting your time or his/hers looking at homes where short-term rentals are not allowed.
Furthermore, if you can and will rent, consider hiring a rental management company to handle the details. It’s easier for someone who is present at the location to handle leases, keys, cleaning, and other rental-related necessities. They can also handle emergency situations so that you’re not hopping on a plane every time there’s a problem of any size.
And don’t forget! You’ll be paying taxes on rental income. Remember, renting your house basically makes you an innkeeper and you’re likely to be subject to the same taxes as hotels, which means you’ll need to collect lodging fees. If you don’t, you’ll find yourself putting more out of your pocket than that for which you’d planned.
Is this part of any investment?
Finally, if you’re viewing the purchase of your home as part of your investment portfolio, crunch the numbers carefully before you buy. Estimate your returns to determine whether or not real estate investing is the right vehicle for your money. If it’s not, you need to decide whether you’re willing to simply spend the money “for fun” within being concerned about what you’re getting out of it in the long-run.
An experienced agent will be honest with you as to whether you’re considering a wise investment and can help you find the vacation home that’s perfect for you, should you decide to move in that direction.