Owning a vacation home is an increasingly popular notion in America. In 2014, vacation home sales hit a record high 1.13 million, roughly 21% of all residential transactions that year. While vacation real estate is glamorous industry to look into, it is important to maintain certain reservations before jumping straight in. Here are the top five tips when considering investment in a vacation home.
Can you afford it? Real estate is not a liquid investment. You most likely won’t turn a profit on the property for the first few years of ownership. Make sure you’re in it for the long haul. Financing can be difficult; mortgage companies often charge higher interest rates or require higher down payments on vacation homes. However, there are options, such as using the equity of your first
home as leverage to justify lower rates. It would definitely be wise to consult a mortgage broker on this matter.
In addition, the actual price you pay for the property is only part of the predicament. You must also consider the external costs associated with buying a vacation home, like insurance and maintenance. Short term rentals can often present the most value for your dollar. Seeing as you never know when you might incur damage and repair costs, it is best to play it safe. Maintenance, however, can sometimes cost an unforeseen significant chunk of change. Common maintenance expenses include exterior paint, roof jobs, and long term improvement projects.
Be sure to iron out the finer details of life at your vacation home, including the drive out there. The best way to get consistent use out of your vacation home is to select a location of relative convenience. You may find that a nice 2-3 hour drive between spots is a more desirable option than making a lengthy journey out to your dream rental. There may be plenty of delightful option nearby. The accessibility of your vacation home will most likely play an influential role in how often and how long you’ll visit.
Scope Out the Location
General location may seem like an intuitive step for vacation home searchers. If you’re a skier, you’ll obviously want a home by a mountain. If you’re into beach relaxation, you’ll pick a coastal town where it’s warm and sunny. In your research, would be wise to give a property a trial run, to see if you’d truly enjoy your time there. Familiarize yourself with the community and the amenities. Learn the quirks and rules and regulations of your preferred neighborhood. The more surprises you eliminate, the better you’ll feel about your purchase. One valuable tool in evaluating a location would be to contact a real estate broker that knows the area well.
You can’t go wrong with getting a clear picture of a residence’s safety situation. Research the level of crime or frequency of criminal activity in the area. You may be susceptible to vandalism or a break in if you leave the house vacant for ling stretches of time. The best way to prevent any mischief or malice directed toward your vacation home is to figure out who will be watching when you’re away. One popular location for prospective buyers is gated communities. If you join a gated community, you will have much more peace of mind about the safety of your home. Some communities even ensure 24-hour security. Keep your options open, but keep in mind the value you place on security.
If handled properly, your investment in a vacation home can actually turn into nifty way to generate income. If you put the proper money and effort into repairs and maintenance, you may see the value of your home rise in the ever-fluctuating real estate market. Another thing to consider would be allowing renters to occupy the property in your absence. Ideal renters will contribute to the maintenance of the home, and the income you earn will help pay off the mortgage faster! This is another area where contacting a local agent would be helpful. Agents specialize in smoothing the process of connecting owners to renters.