10 Things to Consider When Buying a Vacation Home

Written by Posted On Friday, 18 August 2017 09:41

Purchasing a vacation home is everyone’s dream, escaping the lull or work or the stress of life at home, but not too many people actually purchase one successfully without running into debt or common mistakes. In the guide below, we will take you through the top 10 things you should consider when purchasing a vacation home to avoid making the usual mistakes most vacation homeowners make.

1. Price

When purchasing a vacation home, you have to take your budget and house prices into consideration. When browsing vacation homes, look for areas that have the cheapest vacation homes for sale if you are on a tight budget.

2. Location, Location, Location

When purchasing a vacation home, take the house’s location into account, especially if you are planning on renting it out during the off season. Before signing anything, make sure that you can handle the vacation home location and won’t be losing any money purchasing it. To help you decide where to buy your vacation home, research the best places to live in United States.

3. Vacation Length

When you’re choosing a vacation home, you should pick one that you plan on visiting frequently. As much money you can make renting it, having your house sit empty for too long can damage its integrity.

4. Calculate The Risk

Before agreeing to anything, take into account that the cost of the vacation is only a percentage of the overall cost that you will need to pay. You will also need to set aside money to pay for insurance, furnishings, utilities, condo or HOA fees, and more. Be sure to calculate the risk of purchasing the property before signing a single paper.

5. Rental Income

When browsing vacation homes, make sure that you are looking at homes that perform well for short-term renting. After all, you should be using your vacation home more than your renters, but you also need your rental income to pay off your mortgage at the same time.

6. Have Realistic Expectations

When calculating how much your rental income will be for your vacation home, stick to realistic goals. Don’t forget that renting out your property comes with a price, such as cleaning costs and property management.

7. Understand the Rules of the Property

Keep in mind that not every home or apartment is allowed by condo or homeowner associations to be used as rentals. Plus, some associations even have a set amount of rent you’re allowed to charge, as well as the percentage they’re allowed to take out of it. Remember to only purchase a property with intent to rent if it’s legally allowed to be rented out.

8. Determine Your Investment Return

Many people who are interested in purchasing a vacation home are doing so as a part of an investment strategy. Before you put down any money, make sure that this will be a good investment to make. Determine your returns and compare them to other investment opportunities.

9. Don’t Forget About Taxes

In addition to paying property taxes, you will also have to pay both states and federal taxes on any rental income you make. Most vacation homeowners will not earn enough money after accounting for expenses to see a large tax liability, however. Be sure to check out the laws in the area where your property is located. In many states and counties, those who do short term rentals are considered innkeepers. This means that you are also expected to collect lodging taxes just like hotels do and pay them to the correct authorities. Again, these laws vary from place to place, so make sure you are following them.

10. Plan For Times When Your Home is Vacant

Since you will not be in your vacation home at all times, you will need to plan for the times when your home is vacant. Unoccupied houses are often targets of thieves. To prevent this, consider setting up a security system or ensure that your home does not appear empty. You can do this by hiring someone to collect your mail or setting a timer for your outdoor lights.

You should also plan for emergency situations since you will be unable to get to your home right away if something bad does happen. It is especially important to plan if you are renting out your property. Consider hiring a property manager or a handyman that can come by and check on the property. This can help you to protect your vacation home from regular damage and environmental damage, too.

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Carol Evenson

Carol is a home renovation specialist with a background in organization and sales. She assists realtors with business management and growth.

https://twitter.com/cmill_com

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