Owning a vacation home can be a fabulous experience for any family that enjoys getting away to relax as often as possible.
Depending on where you’ve vacationed in the past, your ideal location might be along the beach in the Carolinas, deep in the mountains of Tennessee, next to the calm waters of the Gulf Coast, or next to the lake that is only an hour or two from your primary residence.
Buying a vacation home allows you to combine a sense of home with the relaxation of a vacation, and this can be the ultimate getaway for many families. However, there are a large number of factors that you must consider before investing your hard-earned money into a vacation home.
Much like your primary residence or any rental property, making a bad investment in a vacation home can set your finances back tremendously if things don’t go well. You need to make sure that you have all of your bases covered in order to prevent that from happening.
Here are some of the most important things to consider before forking over a big down payment for your new vacation home:
Where Would You Like To Vacation?
One of the most critical things to keep in mind is that you are going to be using your new vacation home for almost all of your future vacations. Once you own a vacation home at the beach or in the mountains, you are going to have a hard time convincing yourself to spend money on a vacation anywhere else.
That means you need to be sure to pick the absolute perfect location for your family.
Everyone has their own preferences, and you are free to choose your location however you like. But you are also going to want to be sure that you choose a place you will enjoy years from now just as much as you do today!
How Are You Going To Pay for This?
This might be surprising to you, but most of the people who are purchasing vacation homes are not ultra-rich celebrities or lottery winners. Most people who purchase vacation homes are average families that have worked hard and saved diligently working towards owning a great vacation home.
Every situation is different, but you need to have a plan in place for how you will be paying for your new vacation home.
One of the most popular strategies is to make a substantial down payment and then use rental income from the times when you are not using the home to cover the monthly payments. This can be a great way to pay for the home, but make sure you have a backup plan in case that rental income dries up for a few months.
How Often Are You Going to Use Your Vacation Home?
Many first-time vacation home buyers make the critical mistake of assuming that they will be spending much more time in their new vacation home than they ever actually do.
Be honest with yourself and evaluate your work, family, and social commitments. Just because you have a great vacation home does not guarantee that you are going to be free to get to it as often as you like.
Having a reasonable understanding of how often you are going to be using your vacation home can have a big impact on the perceived value that it brings to your life, and the value that renting it out when you’re not using it can have.
Do You Understand the Tax Implications?
Owning a second home is going to introduce a number of new tax liabilities into your life, so you are going to want to discuss those in detail with your accountant.
You are going to be responsible for paying real estate taxes on your new property. On top of that, if you choose to rent the house when you are not using it you will owe taxes on that rental income. You will also be exposed to capital gains tax should you ever sell the property for more than you paid for it.
Who Will Handle the Maintenance?
Having a second home also means having a second set of maintenance tasks that need to be handled.
If you are not going to be using the home very often, you will need someone to handle the basics like grass cutting and landscaping for you. You will also need a whole set of professional contacts for issues involving plumbing or electrical work that needs done.
Buying a vacation home can be an awesome experience for your entire family. But it can also be a huge undertaking if you are not properly prepared for it.
One of the best ways to ensure that the process of finding, purchasing, and maintaining your new vacation home is to work with a local Carrington Real Estate Services agent that specializes in vacation homes. They will be a wealth of information for you throughout your search for the perfect getaway location.