You’ve finally gotten yourself to a point financially where you’re ready to invest in your happiness. Now that the housing market has begun to bounce back, investing in something such as a vacation home doesn’t seem like a bad idea. Not only can you retreat to your private oasis when the weather gets warmer, but you also have the potential to make a profit by renting it out during the rest of the year.
Sounds like a win, win situation. And if you’re going to live anywhere in the US, why not make it someplace sunny like the state of California?
Best California Cities to Purchase Vacation Homes
According to a top ten list put together by CNBC, Los Angeles and San Diego, California come in at number 6 and 7. Los Angeles at number 7 is a beautiful place to consider purchasing a vacation home. With a 35% drop in housing costs, it makes it an affordable, yet luxurious location to live in. It’s conveniently located near Hollywood and also has an array of things to keep you busy from beaches and state parks to shopping and fine dining. Coming in at number 6 is San Diego, California. With a median home price of $307,000 you can certainly find something attractive and affordable. If you enjoy warm weather, you’ll certainly appreciate the 200 days of temperatures in the 70s or above.
Both of these cities are great to consider moving to during the summer months (or all year long really). However, before you get caught up in the beautiful aesthetics of San Diego real estate options in Southern California, you’ll want to consider a few practical considerations.
- Don’t Get Caught Up in the Moment – Buying a second home is something that should be taken as seriously, if not more serious than when you purchased your first home. You will need to consider the various responsibilities as well as the costs. Therefore, it is strongly advised that you don’t simply get caught up in the moment and purchase a Californian vacation home that you’re really not prepared for.
- Location is Key – When considering the location of your vacation home, you’re going to want to think about the overall purpose for this second home. Are you looking for a home that can be enjoyed by your immediate family whenever they’d like? If so, you’re going to want to stick with something that is easily accessible (location wise) for everyone in the family. Are you looking for a home that you will rent out for a better part of the year? If this is the case, then you’ll want to choose a location within California that is popular for renters.
- Try Renting First – Before you decide to jump out of the window and simply purchase the vacation home of your dreams you’re going to want to test drive it first. Sometimes, a place can seem like the greatest destination to live – until you actually live there. Therefore, if you can try renting out a home first and taking a few trips to the location to visit. This way you can get a feel for what it’s like to live there before making any “permanent” decisions like taking out a second mortgage.
- Purchase Within Your Budget – It can be pretty easy to get caught up in the beautiful designs of California vacation homes without considering the price. Some will believe that going over budget is not a factor if they’re going to rent out their vacation home, however, rent is not guaranteed to be paid timely, nor is there a guarantee that you’re going to get someone to rent the property. Therefore, going over budget and not accounting for these happenstances could leave you in debt. Choose something that you can easily afford with or without a tenant.
- Understand Your Tax Responsibilities – Some will assume that they fully understand the implications as it pertains to paying taxes on their vacation home, however, making assumptions when it comes to tax laws could leave you in a great deal of trouble with the local and federal government. Tax laws on second homes are often a bit more complex and therefore you want to make sure that you understand all the financial responsibilities that will follow after signing the contract.
Living the life of luxury in a state such as California can certainly be a lot of fun. While having a vacation home is a great way to explore a new area, spend time with friends and family members, and earn a little income (if you intend to rent it), it is not something that should be taken lightly. As you begin looking at available real estate in the area, be sure that you’ve considered all of the above tips. Taking the time to do your homework is often the best way to ensure you’re making an informed decision that won’t come back to bite you in the behind later on.