Investing in a Vacation Home? Consider These Tips!
by Mary Ann Eckberg
Vacation! The very sound of the word vacation brings to mind a relaxing get-away, a place where all the cares and worries of day-to-day life disappear. No meetings, no deadlines, no "to do" list. Just a chance to do nothing with absolutely no guilt!
When you think of a vacation, where would you like to go? What do you prefer to do while on vacation? Splash in waves at the beach? Hike to a scenic mountaintop overlook? Ski in fresh powder at the slopes? What if you could live at your ideal vacation destination? Seems to me, having a home at my favorite vacation spot would be a little slice of heaven on earth.
Before jumping into the dream of purchasing a vacation home, there are a few things to consider.
1. Make a good choice.
A great vacation in a lovely spot may lead you towards an investment there, but steer clear of buying on impulse. For instance:
- How well do you know the area where you’d like to buy? Are you sure you will continue to visit this place on a regular basis?
- Before investing in a vacation property, thoroughly research the amenities of the area. Make a visit to the area in the off-season. Have a chat with local residents. Ensure that this area meets all of your needs.
- Unlike passing through a hotel, your vacation home is for keeps!
2. Budget for bills.
Even if you only visit the vacation property once in a while, expenses will need to be added to your budget, such as
- Property taxes
- Insurance costs
- Utilities, such as water, power, gas, trash, cable/internet, and any neighborhood association fees.
Be aware of these bills and plan for covering any additional costs. Consider setting aside two percent of the value of the home per year for home maintenance upkeep and repairs.
3. Hire help.
Since you may not be able to visit the vacation property as often as you’d like, you may want to hire a property management company. If you’re miles away, it may put you at ease to hire someone to check on things. The management company may also tend to any landscaping needs, provide property winterizing (preventing frozen pipes, etc.), as well as keep tabs on the status of the house.
4. It’s not always fun.
Imagine arriving at your beloved vacation spot to kick-back and unwind. You open the front door and are greeted with a puddle of standing water from the leaky roof! This property will require all the same home maintenance (including unexpected repairs) as your current home does. But at least you’ll be completing chores in an area that you truly enjoy.
5. The rental option.
If you may not be able to visit your vacation home regularly, consider listing it as a vacation rental property. The income gained by renting it out may help you to build equity and eventually pay off the property.
Research landlord/tenant laws in the area, if listing the property as a rental. If you decide to hire a property management company, they may be particularly helpful with screening renters and tending to any leasing needs.
A drawback of the rental option may be that the property is rented out at the same time as when you would like to be on vacation there. Be aware that you may need to give up peak vacation time for others.
6. Safety first.
An added benefit of listing your vacation property for rent is that the status of the home would be occupied. Leaving a place unattended for lengths of time may be inviting trouble.
When choosing a vacation home, consider the safety of the neighborhood and surrounding area. For added security, install an alarm system. Add the security contract to your list of budgeted expenses.
7. Weekend home? Or future home?
When considering purchasing this additional property, decide how it will be used. Will it be a spot for weekend get-aways? If so, factor in the commute. After a long week, sitting in traffic just to reach your second home may not be worth the hassle. No matter how beautiful the spot, if the journey to get there is complicated, you might want to invest elsewhere.
Are you investing in this property as a potential retirement location? If that’s the case, do your homework on the best options for health care in the area. Also, keep accessibility in mind with the layout of the home if you’re looking for a retirement nest.
Hoping you find a dreamy spot to enjoy your well-deserved vacation time, year after year!