Buying a place to spend the occasional weekends is a paradise if you think about it. Some of the biggest benefits are having your place to go when you want and knowing that you can always go home.
The major drawback is the cost. Vacation homes are like owning another car; they lose value over time while you still pay monthly fees. Not to mention the installation of a major appliance might be needed at some point.
Buying an investment vacation property requires serious consideration of several factors, including your budget, location, amenities, and more. Here are five things to consider before you buy a vacation home:
What’s Your Financial Situation?
Your financial situation will determine whether it’s sensible to buy a vacation home. The last thing you want to do is use all your disposable income for the mortgage and maintenance fees, leaving nothing for an actual getaway.
Will You Be Able to Pay Annual Expenses and Maintenance Costs?
Do some research into annual expenses or potential costs that may go beyond the initial purchase price. Here are some examples: Property taxes, HOA fees, lawn maintenance, pool maintenance, home insurance, appliances, heating, and cooling system, garden work, landscaping, extra furniture service, cleaning services, Internet, and a Satellite TV for entertainment. Just think about all those recurring costs.
Is It Close to Your Primary Residence?
It’ll require extra travel time if you have to go very far from your primary residence in case something goes wrong with the rental property. In case there’s an issue, will you be able to make it on time?
Managing vacation properties can be difficult, especially if they’re not nearby. Have someone on staff or someone nearby who can respond in case something goes wrong with the property (or guests).
Will You Be Living There?
If not, what are the downsides of doing so? Do you know how much it will cost if you decided to move in permanently? Will it cost a lot more than renting a regular apartment for a year? Make sure your plans won’t backfire.
Will Your Lodging Require an Appliance?
When you buy a home, it probably is going to need a major appliance. A vacation property is unique in that it is likely to require unique appliances. If there’s no oven or stove-top, then having a traditional air conditioner is useless. And if you need a special kind of refrigerator, then your budget is going to be drained quickly.
Is It in an Area Popular With Tourists?
A home that is popular with tourists will likely increase its value over time. This means the potential for capital appreciation and greater tax benefits at the end of the year when you sell it.
Choosing the right home
Vacation real estate does not come with the same benefits as residential properties. Aside from taking care of major issues such as appliance breakdowns, owners also need to consider paying for maintenance and repairs as well as hiring those who will manage those properties. These expenses could be substantial, so they should only invest if their budget is enough. It’s also smart not to purchase a place that is too far from their primary residence.
Traveling back and forth to a vacation property will only cost them more money, time, and energy. It would be great if they choose a spot that’s near where they live or at least in a popular area with lots of activities for visitors. If it’s too isolated, guests might decide not to return even after the owners make necessary improvements.
To generate good income from their investment, it’s best if they buy a home in an area known for its tourism industry. There are likely going to be lots of people who want to book this type of lodging so one way to increase chances of success is by buying the right place in a sought-after location like, let’s say, Las Vegas. There are many investment properties for sale in this city so buyers can’t go wrong when they choose one that’s already popular with guests.
Having a good manager is key. If something goes wrong on their property, then it’ll be up to them how quickly it gets resolved. Making sure the person they hire will be there whenever they are needed is best because vacation properties are different from residential ones where owners can easily handle any problem themselves. They can keep their rental income safe and help them avoid paying higher taxes at the end of the year because a good one has all the necessary skills to ensure the business runs well.
Purchasing a vacation home requires a significant amount of money, time, and effort. It’s best to think about the factors mentioned above, so they don’t regret their decision later on. While it might seem like any investment will lead to profit eventually, some weren’t as lucky as others so buyers should consider this carefully before deciding whether they want to go ahead with it.