Buying a Vacation Home
Do you dream of lazy summer afternoons spent admiring ocean views from your veranda? Or maybe you love the idea of snuggling by your own fireplace after hitting the slopes all afternoon. It may finally be time for you to buy that vacation home you’ve been dreaming about for so long. However, as with any home purchase, you should carefully consider the decision. Here are the questions you should ask yourself when you’re thinking about buying a second home.
Where will I buy?
The most obvious question to ask yourself is where you should buy your vacation home. Ideally, it should be in a place that you will frequently visit and that is fairly easy to get to. While a second home in the South Pacific sounds amazing, it’s unlikely you’ll get there more than once or twice a year. In fact, most people buy vacation homes that are within driving distance of their primary residence.
Can I afford it?
This is one of the most important questions you should ask yourself. Can you reasonably afford that vacation home? Not only should you consider the purchase price of the property, but you should also think about hidden costs. Will you be paying any HOA fees? What maintenance costs can you expect? Will you be paying more for insurance?
Will I use it as a rental property?
Some buyers decide to rent out their vacation home when they’re not using it, to help cut down on the costs. But you need to be realistic about how much income you’ll make from it. Keep in mind the added expenses that come with a vacation rental property, such as management fees, cleaning service fees and important incidentals like snowboarding, surfing or other gear. You should also know whether or not rentals are permitted in your resort, development or municipality before you buy.
Who will watch it while it’s vacant?
Even if you plan to visit regularly and rent it out while you’re not using it, there will still be times when your home is vacant. Have a plan for how you will handle those down times. There’s nothing worse than visiting your vacation home, only to discover that a leak has gone unnoticed for a long period of time or that the pipes froze while you were away. Get recommendations for a local management company that will make regular visits and maintain your property when it’s empty.
Is a timeshare or joint ownership a good idea for me?
If you’re not ready to take on the responsibility of owning a vacation home all by yourself, you might consider a timeshare or jointly owning a property with friends or family. Keep in mind that with timeshares you will be required to pay annual maintenance fees, and you may lose money when it comes time to sell. And if you want to buy with friends or family, make sure you have a good relationship and a clear contract before moving forward. Agree in writing to all the details of the partnership and how the property will be used, to avoid any potential conflicts.
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