As with any investment, buying a vacation home is something to be smart about. Many deciding factors should go into making the decision to buy a second home.
I have put together some helpful tips and things you need to know as you move towards buying your vacation home:
- Location IS Important – With the convenience of the internet you have the ability to search for homes for sale in almost every country. Making sure you pick the right vacation location is important. What are the reviews on the area the home is located? Have you been there and visited the country or town personally? These are all imperative questions and ones that you should not disregard. Knowing the amenities and the type of neighborhood can help you to make the right move. Even going as far as to visit the area during less peak times of the year to get a feel for the town when there are not so many tourists.
- Income potential – if you are looking to rent your vacation home while you are not there, make sure the home is located in an area that people want to visit. Is the home close to local tourist attractions and other amenities? These are all good things to investigate if you are looking for the passive rental income and not just the best for sale price. If the price is low high but not close to any amenities that vacationers may want to visit, then you might have a difficult time trying to rent your home out to help pay the mortgage.
- What are the costs? – Just like your primary residence, your vacation home comes with additional costs like maintenance, insurance, and mortgage interest. Depending on the bank and your personal creditworthiness, many secondary homes come with a heavier price tag. The last thing you want to do is bite off more than you can chew financially. If the bank deems your purchase as an investment property, you may be looking at a higher mortgage rate as well.
- Don’t make an emotion decision – before you consider the whole picture, you may be tempted just to look at the beauty and glam of the vacation home. Making an emotional buying decision may leave you with regrets later. That is why it is important to take your time and don’t feel pressured to commit to buying your vacation home. A lot of times in real estate, there is pressure because you are afraid the home will be sold fast. While that may be true, there are always more homes out there!
Buying a vacation home is a great investment and one that should not be made flippantly. Looking at all your options both geographically and financially will ensure you make the right decision!