A second home at a favorite holiday destination – it’s a dream that many people cherish. Whether you own a large corporation or bootstrapped startup, chances are you’ve harbored the wish to buy a vacation property for a while now.
Of course, most tourist destinations are home to spectacular resorts and luxury accommodation options. But having your own place in the mountains or a beach town sounds more exciting.
Being the year that 2020 was, most people have realized the importance of having a comfortable and welcoming home. With various travel restrictions still in place, a vacation home might be the only way you can explore new destinations.
The Challenges of a Vacation Home
But staying in the countryside for a couple of weeks is one thing. Buying real estate there is a different ball game altogether. Whether you’d like to use your vacation home for recreation or rent it out, you should keep in mind that it’s a long-term financial investment.
Anyone familiar with the real estate market will tell you to be cautious before spending your money. It’s all the more crucial when you’re buying a vacation home. This is because you may not be fully aware of the community, tax regulations, local weather, and other factors before making the purchase.
Also, you need to watch the real estate market and analyze whether it’s a good time to make an investment. With many people losing their jobs and moving to more affordable housing options, you can expect the market to be slightly unpredictable in the near future.
But despite the challenges of 2020, the average home price has only increased by 5%. This means residential real estate rates will only see a modest surge in the next two years. So, if you’ve been meaning to buy a second home in your favorite tourist city, this is a good time to take action.
In this article, we’ve outlined a few useful tips for purchasing a vacation home. Let’s take a look.
1. Know Your Why
Do you intend to visit your vacation home multiple times every year? Are you hoping to host family gatherings and celebrations there? Or are you planning to use it as a rental to make extra money? Or is it the place where you’re going to stay after you retire?
Your answers to these questions will determine the type of property you should select. Also, it’ll influence other decisions, such as how much money you have to spend and what kind of area you should select.
For instance, if you intend to use it as a retirement home, it’s a good idea to invest in a plush duplex situated on the outskirts of the tourist hub. On the other hand, if you want to rent it out, it’s wiser to choose a property that’s situated close to the tourist attraction in the area.
2. Get Professional Help
Buying a home isn’t as simple as finding a great property and signing legal documents. You need to negotiate the final price, analyze the potential resale value, and figure out the rental cost.
Also, when you’re buying a vacation home, you must have a clear idea of the local tax and legal regulations. You even have to check out various neighborhoods before selecting one that fits your preferences.
That’s why it is a good idea to hire a professional realtor who is familiar with the area. For instance, if you’re looking to buy a vacation home in Los Angeles, consulting a reputed realtor service, such as Maser Condo Sales, is a great idea.
An experienced realtor takes the guesswork out of the process and helps you make the right decisions based on facts and statistics. They can also guide you through various financing and mortgage options, as well as advise you on the right time to purchase.
3. Rent Before You Buy
Once you’ve selected the location of your second home, it’s a clever idea to rent a property in the neighborhood and stay there for a few weeks. Repeat this across all four seasons to better understand how the road conditions, crowds, and weather change throughout the year. This can go a long way to save you from the regret of buying a vacation home in the wrong destination.
4. Factor in Additional Costs
It’s not enough to save money for the market price or downpayment of your vacation home. You also need to accommodate various expenses, such as insurance, taxes, furnishing, and maintenance costs. For instance, if your property is situated in a beach town, you’ll need to get it repainted every couple of years.
Likewise, if you plan to visit only once a year, you might have to arrange for a caretaker to look after the property in your absence. Even if you’re going to use it as a rental, you must have enough money in hand to accommodate all these expenses. What factors would you consider while buying a vacation home? Share your thoughts in the comments section below.