Buying a second home is not a decision to be made lightly. A vacation home brings with it a myriad of responsibilities and opportunities in equal measure, all of which come into play simply because of all the components of property ownership.
Your vacation home is a secondary dwelling, not your primary place of residence. That distinction puts the matter of money and budget at the forefront much more so than it does with a primary home. Everyone needs a place to live, but not everyone necessarily needs a vacation home. However, they sure are great to have at your disposal if you can comfortably afford it.
When the time comes to decide whether or not it’s time to purchase a vacation home, you’ve got a lot to think about before you sign on the dotted line. Here are just a few factors you should consider.
Is it the Right Time to Buy?
Top real estate agents can give you some good advice on the market trends and what areas are most affordable and desirable. They can also tell you if it is the right time to buy a vacation home or if you are better off renting for a few more years until the market improves.
Even if you consider your home to be an investment property, you can’t necessarily rely on it to be profitable or even offer a break even, particularly within the first year or two of ownership. If you’re hoping to make money off of this real estate transaction, then you’ll want to start looking once the area becomes a buyer’s market.
Consider All Costs
The purchase price of a vacation home isn’t the end of your expenses, in fact it’s just the beginning. Make sure to factor in additional financial responsibilities from HOA or condominium fees, property taxes, utilities, and furnishing and decorating inside the home.
Are you planning on renting the property during the off-season or out while you’re not using the space? If so, then you may want to spend more on extra amenities to make it an attractive rental option and also hire a management company to find and handle rental requests.
Can You Rent It?
That’s something to think about if you’re planning on buying the vacation home to rent it out. Depending upon the house and where it’s located, your HOA or neighborhood association may have restrictions and regulations on renting the property. Oftentimes units within a larger resort property have limitations as to your rights in that regard. However, if you intend to rent it, you may want to limit the amount of improvements you put into the house.
You’ll want to be sure you ask about these restrictions before you buy. If you don’t, the best Realtor you can hire should have this possibility in mind already and have the proper information on the matter.