What to Know About Buying a Second Home
Updated: Oct 10, 2019
By Bill Gassett, MaxRealEstateExposure.com
Buying a vacation home is great for a number of reasons. Not only does it serve as a great place to spend time away from the world, but it also works as an excellent investment for you as well. Take a look at why you should invest in a vacation home.
Picture this. You’ve been working hard lately. You’re run-down and in need of some relaxation and refreshment.
But instead of having to go through the headache of booking a trip away, you just pack a bag and hop in your car. And, just like that, you’re at your very own vacation home.
No expensive rentals, no scheduling hassles, just a beautiful getaway in the comfort of your own property- set up just the way you like it. Sounds perfect, right?
If this situation sounds idyllic to you, it’s time to look into buying a vacation home. And you may be surprised to hear that it’s a smart investment, too!
Want to learn more? Keep reading to determine why a vacation home is a terrific investment for your health, happiness and your wallet. Plus, we’ll throw in some handy tips on how to find the perfect home away from home for you!
Buying a second home should not be a spur of the moment decision. What to know about investing in vacation property is not as simple as it seems. You’ll want it to be one of the best choices you make in your life!
Buying a Vacation Home for Enjoyment: Why It’s Worth It
So, why is a holiday house the perfect place to get away from it all? Pretty simple really.
You Will Create Memories That Last a Lifetime
Creating lasting memories with your family is essential. And that is precisely what you will do by purchasing a vacation home.
After all, making time for family and friends can be difficult. Between work and tasks around the house, it can even feel impossible.
But if you have a place where you can go with your loved ones, turn off your phones, and spend some quality time together, all of that can change. All you have to do is pack your bags and hit the road!
It’s Good for Your Health
Everyone feels great after a fun-filled vacation. But did you know that going on holiday is good for your health?
Some time away from your everyday life will help you reset mentally and physically. In fact, in a survey of over four hundred people, ninety-four percent reported that they felt more energized after returning from a trip away.
A vacation home investment will give you a safe space to get away from it all and give your body and mind what they deserve- a break!
It’s Less Stressful Than Renting
Coordinating everything that is needed to rent a vacation property can be stressful, especially if more than one family is involved in the trip. But if you already own your own place, you have the freedom to go there anytime that works for you.
That means no dealing with third parties, no strict time schedules, and no surprises. Just pure bliss!
Vacation Home Investment Tips: Why Invest Now?
We know that vacation homes are perfect for enjoying time with family and friends. But what makes them such an excellent real estate investment?
Did you know that owning a second home can provide you with some significant tax breaks? In fact, you can deduct the interest on the mortgage of your vacation home in the same way you do for your primary residence.
You Can Rent It Out
Why not make some extra cash off of your vacation home while you’re not using it? Renting your house out to others is a great way to do just that.
And because you own this property, how you rent it is entirely up to you. You can offer it up seasonally or year-round if you prefer.
Just be aware that if you decide to rent out your vacation home, it will change the details of your taxes. So, before you make any decisions, consult your accountant or other tax professional.
It Can Serve as a Retirement Home
You’re buying a vacation home in a specific area because you love it, right? So why not plan to retire there when the time comes?
Instead of having to deal with the hassle of buying a new home when you retire, you’ll already have one that you love, totally set up and waiting for you. You will also be able to take advantage of the market’s prices years in advance.
Here some things to consider when buying a retirement home. Use these tips to make a sound decision with your purchase.
A Friend or Relative Can Live There
If you’re planning to purchase a second home as a real estate investment, it’s often a great idea to let a family member live there as its value appreciates. For example, if you have a kid that’s going off to college, purchase a vacation property near to their school.
That way, they can have a beautiful, comfortable place to live while studying, and once they’re done, you can sell it for a profit.
Buying a Vacation Home Will Diversify Your Investments
Adding a vacation property to your list of investments is a great way to boost your cash flow. After all, it’s always a smart idea not to put all of your eggs in one basket.
Many investment markets are fickle, real estate being one of them. By spreading your investments around, you can take advantage of selling the right things at the right times. And it’s never going to be that hard to sell an extraordinary home in a fantastic place for a gorgeous profit!
Useful Tips for Buying a Vacation Home
So, we’ve reviewed the benefits of vacation home investing, but how can you be sure that you’re choosing the right one? Check out these ten tips to get on the right track.
1. Only Buy What’s in Your Budget
With all of the information we have access to on the internet these days, there’s no reason to be in the dark about what you can and cannot afford. Before you buy, calculate an estimation of what your mortgage will be.
Make sure that you are smart and realistic about what you can shell out for a down payment and monthly payments.
Even if you plan to rent out your new property, don’t count on that when figuring out what you can afford. And remember- it’s okay to start small!
2. Don’t Forget About Added Costs
What do we mean by added costs? We’re talking about home insurance, taxes, utility bills, and maintenance/care-taking costs. When you’re figuring out what’s in your price range, don’t forget to include these in your estimations.
Try to be realistic, even pessimistic, when adding up these costs. If you plan for the worst, then you’ll always be covered.
3. Look for Built Homes Versus Empty Land
Although a custom-built house sounds dreamy, it can be more of a nightmare. In vacation areas, there can be a lot of restrictions on how you can build your home (sometimes down to the paint colors or plant choices), and it can be difficult to find trustworthy workers.
In reality, buying a property that already has a house is a better decision. From there, you can make changes as you like without having to go through the stress of building from the ground up. It’s easier on your wallet and your brain!
4. Steer Clear of Timeshares
Timeshares are finally being outed for what they are: horribly cost-ineffective. Not only that but if and when you decide to sell a timeshare, you may be in for a sour surprise.
Imagine this. You spend over ten thousand dollars on a timeshare. On top of that, yearly maintenance fees are almost one thousand dollars on their own.
You get to spend one week there per year for vacation. Does this sound cost effective to you?
Of course not! When it comes to vacation home investing, buying vacation real estate is a much smarter move than buying into a timeshare.
First of all, the money that you will be investing will be for your profit only. And you’ll be able to use the property as much as you want, too.
On top of all of this, when it comes to selling timeshares, caution is advised. Scammers are running rampant in many areas where timeshares are prevalent.
They collect a fee (which could be over one thousand dollars), saying that they have a client who’s interested in buying. After you shell out the cash, you’ll never hear from them again. Avoid all of this headache by taking matters into your own hands and investing in your personal property, over which you have complete control.
5. Hire a Real Estate Agent Locally
You don’t have to feel like you’re on your own when it comes to buying your dream vacation home, especially if you’re looking in an area with which you’re unfamiliar.
Thankfully, a local real estate agent will know all the ins and outs of whichever local community you’re looking to buy in. Parking issues? Rental restrictions? They’ll warn you.
Seasonal road closures? You may not have known without the help of an experienced agent! Here are some essential questions to ask when interviewing a real estate agent to work with.
Avoid pesky or downright dangerous surprises by enlisting their expertise. You’ll be glad you did.
6. Location, Location, Location
Are you planning on buying in order to rent? Then keep location in mind.
For example, if you’re looking at buying a lake home, make sure you’re checking out lake frontage properties. Because when people are looking to rent lake properties, they want to be right on the lake, not nearby.
Keep other details in mind too. Although a remote vacation may be your ideal week away, most people will want access to modern amenities. Choosing a property close to shops with access to WiFi and cellular reception is ideal.
Even though these properties may cost more upfront, they’re also easier to rent out for a higher fee. Remember- you have to spend money to make money! Here are some tips for buying waterfront property you should know.
7. Consider All Seasons Before Buying
Before you sign the paperwork, it’s a great idea to visit your prospective vacation home during all seasons if possible. After all, different areas have unique traits during different seasons.
You’ll want to make sure that your holiday home will get as much use as possible, not just during the summer or winter.
8. Stay Continental
When purchasing a vacation home, it’s a good idea to buy inside the United States. Because although traveling outside of the U.S. is a fantastic experience, purchasing a home in a foreign country can be complicated at best, or dangerous at worst.
Also, you will likely get more use out of a vacation home that is closer to your primary residence.
9. Keep Things Simple by Investing Solo
In a perfect world, buying property with family or friends would be a pleasant, uncomplicated experience that would relieve financial burden and create a warm, shared space. But unfortunately, when you invest in properties with others, things don’t always go as planned.
In fact, even the most harmonious families can be compelled to disagree and argue regarding joint investments. These fights can start over when to sell, when and who to rent to, and sharing time at the property.
The best way to avoid any hostility is to take on a vacation home investment on your own. But, if you think that a joint investment is a right decision for you, just be sure to create a specific and detailed contract.
And keep track of expenses, too. When money is involved, some may remember the exact figures differently than others.
10. You Can’t Put a Price on Time Well Spent
At the end of the day, right now this home is for you, whether it’s a monetary investment or not. So make sure that you love it.
Put your own enjoyment as a number one priority when selecting this property. Remember you can’t put a price on time well spent!
As you can see, buying a vacation home is a great investment for your mind, body, and bank account. So whether you want a holiday house for personal use, monetary gain, or both, don’t hesitate to begin your search.
After all, going on vacation is great for your health. And investing in real estate is an effective way to make some extra cash! Just remember to hire a local real estate agent and to be realistic about your budget when you start viewing properties.
Once you find that perfect fit for you, sit back, relax, and enjoy some well-deserved time with family and friends. Because a vacation home is an ideal place to create memories which will last a lifetime.