If you love to travel (and chances are, if you’re reading this blog post, you do), buying a vacation home might seem like a natural conclusion, especially if you visit the same destinations year after year. Many people claim they save money and have a better time when buying a second home in the destination of their dreams, but is it the right step for you? The perks and problems about owning a vacation home to help you decide if you want to buy one. Find information about buying a vacation home.
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“The first thing to consider is the motivation behind investing in a vacation home,” says an article from property management firm Green Residential. It recommends asking yourself: “What are you hoping to get out of it, and are you buying for the right reasons? The definition of ‘right’ will vary from person to person, but it’s worth thinking about.”
A vacation home on a blissful beach sounds wonderful when you’re in the throes of winter, but before taking on a second mortgage, seriously consider some of the pros and cons that come with buying a vacation home.
Pro: Your Very Own Place
If you’re tired of maids interrupting your relaxing stay in a hotel, checking out at 10:00 a.m., paying for parking, or the lack of privacy, having your own vacation home is a must. When you own the property, no one (apart from the homeowner’s association) can tell you what to do or how to schedule your vacation.
This is a major motivating factor for most buyers. Having your own, unshared place that has total and unequivocal privacy is a huge draw.
Con: The Cost
In most markets, it will be much cheaper to stay in a hotel or rent an Airbnb than it will be to buy a vacation home, even though a low mortgage with great interest rates might seem more appealing.
“It is less expensive to stay in hotels in various destinations than it is to upkeep a home, including the hidden expenses of caretaking, overall operations of a home and property taxes,” cautions Alison Bernstein, founder of Suburban Jungle, a real estate consulting firm in New York. “However, for those that are able to enjoy it, it is definitely worth it.”
If money is not an object, this downside to vacation rentals isn’t much of a downside at all. It’s your money, and if it’s not a burden to buy another home, do what you please with it.
Pro: You Can Rent It Out for Profit
You aren’t likely to spend the entire year in your vacation home, so when you’re not living there, consider renting it out to vacationers. For example, if you work with a flat fee realtor in California and buy a vacation home in Laguna Beach or Santa Monica, this property would be perfect to rent out all year long. The income can offset the cost of the second mortgage, and if you’re not there often, it can even be a source of profit for you.
Carefully research the likelihood of renting first. Some neighborhoods and locations are less likely to appeal to renters. The costs and risks of generating rental income must be favorable. Research rental rates as well to make sure you’re getting as much out of a night’s stay as possible.
Con: You’re Tied to One Place
When you own a condo in Houston, that’s probably where you’ll spend most of your vacations. For some, that’s ideal. They like to travel to places they know well, so spending three months of the year in the same place is a dream come true.
But if you’re an avid traveler, you probably enjoy wandering a little. Will you be able to afford travel to distant countries, new states, and luxurious resorts if you’ve sunk hard-earned cash into a single vacation property?
Pros: You Have a Solid Asset
Many individuals like to invest their money into assets rather than into banks. Real estate has always been a popular investment for those saving for retirement, college funds, weddings, etc.
“While all assets fluctuate in value in the short term, vacation properties are more likely to retain their value and appreciate simply because they are located in popular areas with a geographically limited supply,” explains Michael Lewis of Money Crashers. “[After all], there is a finite shoreline or mountain on which houses can be built, and only 18 holes on a golf course.”
If you need the money, you can sell the home, seek the help of a reliable realtor like Pat Leavy and you are likely to make a profit if the market is good. That being said, Lewis warns about shaky real estate markets.
“Real estate, like stocks, bonds and other investments, has always fluctuated in value and will likely continue to do so in the future,” he says. “Therefore, be aware that there is no guarantee that a second home will sell for a higher price in the future.”
In all, owning a vacation home can be a fun, profitable adventure. Do thorough research buying a vacation home , so you know it’s right for you.