Planning to buy a vacation home or rental? Here are some factors you need to consider before you go for it.
There can be many reasons for buying and moving into a vacation house. And it is always wise to know why you want to do so. This helps to proceed with your budget and the house plan.
The preferred location of a vacation house may vary from person to person. Some may want it by the beach, others may prefer a mountain top house.
Each location requires different methods of maintenance. So before spending your hard-earned money on the house, do a little research on some necessary factors.
Houses come in all shapes and sizes, but the most important thing is to keep in mind the location of the house.
Some areas are more elegant than others. And some may have lower interest rates in the market. The low-interest properties can be less appealing, but they have less competition than the properties in a posh area.
So, no matter what the main purpose of your purchase is, you need to consider the location of the house while purchasing it. Some locations come with more expenses than others.
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Buy a Vacation Home
The Purposes a Property can Serve
There are various reasons a person may want to buy a vacation home. Some may use it for themselves whereas others use it as a source of income. Nowadays, people don’t even buy vacation houses for personal use but rent them out.
Renting out a vacation house is more profitable than keeping it to yourself. However, the decision is yours whether you want to rent it out or not.
72% of vacation property owners and 71% of investment property owners are predicting that now is the time to buy. Additionally, 45% of investment property owners bought holiday property in order to earn income by rental.
If you are opting for renting out your house, then you’re in luck. Nowadays, renting a property is an easy process due to platforms and apps like Airbnb, Agoda, and VRBO. It is more accessible.
Factors to Look Upon: Owning vs. Renting
As mentioned earlier this decision varies from person to person, based on their personal choice. Some prefer having a vacation house for themselves, a place where they can travel to with family and friends. Whereas some like flexibility and traveling to new destinations every time and would rather buy a vacation home simply to rent to others.
However, people buying vacation rentals are not limited to just these options. Some will only rent part-time and use the vacation house for themselves the rest of the time. Either way, you need a solid financial plan to buy a vacation home.
For those who are struggling to make a decision here are some pros and cons that will assist in making the financial plan to achieve your goal.
Price of the Vacation House
People spent more on their vacation mortgages than their regular houses. But sometimes lower values create fascinating opportunities for buying vacation homes at extraordinary prices.
The sound of owning real estate can certainly make many potential buyers back off because of the high prices of some properties. But high prices are not always the case. We know how markets work, and price often fluctuates, depending on the market value and needs.
Rental Income Generation
Through third-party apps like Airbnb, homeowners can put their vacation houses up for rent as a source of additional income. Hence, buying a house can be a great investment either way.
When you have a house, you don’t have to pay extra for hotels when on a vacation, and you can put it up for rent when you are not there. It is a win-win situation for you.
Keep an Eye on the Hidden Costs
In most cases, people notice only the price that is shown to the buyers/customers. But there are additional hidden costs while buying a house that we often forget to check. We only look at the purchase price and the monthly mortgage or financing fee.
We can factor in all of the extra costs associated with home ownership. For example, property taxes, benefits, membership dues, repairs, and travel expenses incurred when visiting the house.
Other Important Factors for Consideration
Here are some additional yet mandatory tips you should be considering while putting your money into buying a house.
1. Buy a House that you can Afford
This is by far the most important factor after the location of the house when you are willing to buy a house. You should dream big but also make sure it doesn’t cross the line. Because without financial support, you can not buy a house that’s out of reach.
The cost doesn’t only stop at buying the house itself it has other expenses such as:
● Associated taxes
● HOA and condo fees
● Furnishings or seasonal pieces of equipment like water skis, kayaks, boats, or other toys.
No point looking at houses that go beyond your budget. To save both your money and time, go for houses that fall within your price range.
If you are selling your current home part of what you earn could go to your vacation home. If you are in the Colorado area consider getting a detailed quote from HBR.
2. The Way to The Vacation House
Before deciding the location you need to think about your commute to the location. You don’t want to take extra-long and tiresome routes to a place where you want to relax.
As it is going to be your place, you may want to visit there frequently, so long tiresome routes can be a huge disadvantage.
Try to go for locations with an easy commute system. Even if it’s a long route it shouldn’t be tiresome.
3. A Home that Fits your Lifestyle
Your perception of lifestyle also depends greatly on the kind of location or design you want to choose for your vacation house.
If you like quiet and serene surroundings, you might go for a secluded location in the hills in a cottage. But if you are someone who likes the urban lifestyle, then you might choose a luxury condo for your vacation property.
There are pros and cons to both of these lifestyles. Some might not be accustomed to life in the suburbs or a secluded area with less to no internet connection or generator system.
On the other hand, some might detest the chaos of the urban lifestyle. So it is better to sit down with your family and discuss the kind of location you want for your vacation home.
4. Planned Investment on the Vacation Home
There might be times you will be unable to visit your vacation house for some reason. You might get worried thinking about what’s going on in your house, which is being unattended. For that, you can invest in a security or surveillance system.
Or you can hire a caretaker who will give you timely updates on the house. Moreover, they can also take care of the house, so that the next time you visit, it doesn’t look too shabby or dirty to live in.
Make friends in the neighborhood, whom you can trust with your house. For example, when emergencies such as a water pipe leak occur, they can contact you immediately, so that you can take all the appropriate measures.
5. Taxes Are a Must
Consult your real estate agent, mortgage specialist, and accountant about the tax you have to pay for your vacation home. Discuss with them the possibility of selling your summer home if you live in another province.
Certain states levy a conveyance tax on buyers and/or sellers when an out-of-state person sells or buys a home.
6. Be Prepared to be More Social
When you plan on buying a vacation home, you must be ready to get some company in the future as well. You will suddenly become the vessel of entertaining more friends and relatives.
Prepare open-door policies to invite guests from around, so you can interact and make friends. This will be a great way to find trustworthy friends to look after your house when you aren’t around.
Go for your Dream Vacation House
Vacation homes can be a great investment for entertaining your friends and family, and on top of that, it can be a place for your future generations to call their house as well.
Dream big, buy a vacation home you want and use it for you and your happiness.