What to Consider Before Buying a Vacation Home
After fighting for lodging, packing up pounds of beach toys and shelling out the cash for a rental, you may have left your summer break looking to purchase a vacation home.
While a vacation home can be a major convenience and a good investment, there are some things to consider before taking the leap.
· Think about how the home will be used.
If you want to use the home as a rental property, it’s important to check out rules regarding rentals. This can include rules from both the city and the homeowners or condo association.
· Consider all the costs.
In addition to the purchase price of the home, it is important to consider the expenses that can add up when using a home as a rental. These can include things such as cleanings between tenants, advertising, and home furnishings.
· Prepare for vacancies.
Whether or not the property will be open to renters, there will probably be a time when no one is occupying the home. Installing an alarm system and asking neighbors to keep an eye on the house can help prevent break-ins.
· Have a plan for emergencies.
If you don’t plan to be at the home very often, consider hiring a property manager or someone who will be there on a regular basis. This will help in making repairs before they get out of hand and preparing the home for storms or different seasons.
· Be realistic.
If you don’t plan to use the home more than once a year or are expecting the rental income to allow you to quit your job, be sure to run to numbers with an experienced loan officer to ensure your expectations match reality.
· Be aware of the impact a second home will have on taxes.
Second homes are taxed differently than primary residences and those that are considered rental properties are taxed differently than personal-use properties.
· Decide which type of home is best.
If you don’t want to commit to the maintenance required for a single-family home, you may want to consider a condo or apartment. Not only can this help with maintenance and security, but a complex may offer amenities that will help grab the attention of renters.
· Work with local real estate and mortgage professionals.
Just because you vacation in an area doesn’t always mean you know enough about it to make an educated purchase decision. Local agents and lenders can help navigate an unfamiliar market.