Haven’t we all vacationed in a beautiful location and thought about how wonderful it could be to own our own piece of paradise?
Before you make a decision to purchase a vacation home, there are some very practical things to consider:
How many times have you visited the area?
If you think you love it there, it might be wise to dedicate many vacations to the area you may purchase in, potentially even over a number of years. When you purchase a vacation home you may feel the pressure to take most of your vacations there because of the expense of owning the property. For vacation homes located in seasonal destinations or smaller towns, will you get bored? And will you get tired of the holiday traffic and influx of vacationers? Will you be ok with spending a lot of time in one spot?
Have you gone at different seasons throughout the year?Every destination has its prime times of the year, but how do you feel about it in the off seasons? You may want to consider a trip for each season of the year to explore the activities and the weather before jumping into a purchase. You might discover that what’s amazing in the summer is isolating and lonely in the winter.
What would be the time and travel costs to get there?
Many vacation home owners choose to buy something that is less than 200 miles away, allowing them to drive rather than fly to reduce travel expense. If you must fly to your dream destination, do your research ahead of time to determine your annual travel expense.
How will weather conditions impact maintenance?
When you are purchasing in a climate that has very definite seasons, and if this is something you are not used to, you will want to talk with local people to find out what utilities and overall seasonal maintenance factor will be.
Would you consider renting it out for a portion of the year to cover expenses?
For some people, turning their vacation home into a rental when they are not using it is a no brainer. For others it’s a difficult decision. Vacation rentals are a booming business, and many travelers prefer a home instead of a hotel stay.
Keep in mind you will need to be realistic about the number of days it may rent, the fact that the prime times you want to be there could also be your biggest money earning times, when renters want to be there too.
With all the negatives that could go along with renting out your vacation home, the positives can be enough revenue generated to cover expenses or even to fast track paying off the mortgage. Online rental sites can make it relatively easy to post your property and even supply for you the agreements and often insurance for your protection. You, however, will need to set the guidelines for fees you charge, who you will rent to, and the days of availability.
How much down payment will you need to purchase?
Lenders often have different underwriting guidelines for second homes, and may require that you put more money down. If you plan to rent the property out for a portion of the year, most lenders in resort markets will be familiar with this and yet will most likely be conservative on the potential rental amount they might estimate is possible.
Bottom line….owning a vacation home can be a dream of a lifetime, and can create a legacy property for many generations of your family to come. With all the factors to consider, it makes sense to find a local real estate agent who is an expert in the area and can give you a good education and broad perspective to market opportunities and information critical to making a wise purchase.
For a connection to a top quality agent in the area you are interested in, contact me at the number on this newsletter. Also, as a member of the Elite Agents Online Referral Network I can help you find a quality agent anywhere in North America who specializes in vacation home ownership….no cost for the service and absolutely no obligation, just free information!