Many of us have seen the television shows like Beachfront Bargain Hunt and Lakefront Bargain Hunt showing ordinary people buying their dream vacation home to enjoy with their family. In many cases, the individuals purchasing the house are also looking at their vacation home with an eye towards making money either today as a rental property or as a longer term investment for later in life. While not all the benefits are financial, here are some things you should think about when purchasing a vacation home as an investment.
Building Lifelong Memories
A vacation provides a place where your immediate and extended family can get together for vacations and getaways. As your family starts to grow up and head out into the world, your vacation home may serve as a great place to get together for a week at the beach or a winter holiday retreat. Many vacation homes offer amenities that you can't find at home like swimming and boating or skiing and tubing. This provides fun activities for everyone. If you are looking to keep the home for a long time, is it a place that will accommodate a growing family or will it just be for use by you and a few others.
Another thing to consider is that many people use this time as an opportunity to reconnect with family and disconnect from the world around them. Being away from home tends to make everyone feel more relaxed. If that is the kind of vacation home you are looking for? Does this space offer that kind of retreat?
Using Rental Income to Help Pay the Mortgage
Many second home owners like the economic advantages of renting out their property when they are not using it. There are many things to think about if this is the route you are considering. Here are some key questions.
- Property Management Company: Having a property management company handle small maintenance issues, renters arrival and departure, upkeep and advertising is a great comfort to second home owners but it comes at a price. Find out how much it will cost and what they are willing to do for you.
- Homeowners Insurance: This tends to be a little bit higher than traditional homeowners insurance since the home isn't always occupied and the occupants change regularly.
- Operating Costs: If the home was used as a rental property in the past, try and see what the operating costs were for the previous owners. This can help determine if you all your costs will be covered by rental income or if you will need to set aside payments each month.
Many property owners who rent out the homes for short term rentals need to set aside the time to spend at their homes unlike those who strictly operate their second home as their own. Determine if it is priority for your family to be able to go away at a moments notice.
Saving Money for Your Future
There is no doubt about it. Home ownership is an investment in your future. Whether your vacation home is strictly for you and your family or you use it as a rental property when you are not there, each month you pay the mortgage, you are building equity in your purchase. With home prices on the rise again, this trend is encouraging that good things are on the way for homeowners. Before you purchase your home determine the market for the area you are looking, ask questions of your real estate agent and others who may own property there. The best advice is to do your homework. This will help you get the best home for your family today and tomorrow.