According to the National Association of Realtors, on average, about one in eight homebuyers buy a second home. During winter months it’s very common to daydream of escaping to somewhere warm and soaking up the sun on a beach where you’ve invested in your own little slice of paradise. While on vacation in the summer months many people find themselves wondering if they should buy a permanent place in their favorite location for a getaway.
Many people have thought about what their dream vacation house would be like. Some set goals and plan on retiring there when they’re older, others get together with friends and agree to invest together in a beach house that both families can share. Before you begin going to open houses or putting a down payment on a place ask yourself a few questions.
Here are a few things to consider before buying a vacation house.
The most obvious thing to ask yourself is where is it? It can be fun to imagine yourself buying a beachside property in Florida, especially while you’re feeling the winter blues during January in New England. However, in reality, how often are you going to make it down to your vacation house in Florida if you live in New York? The ideal vacation home for many people is one that is about two or three hours away. Realistically, are you going to be able to pack up your family or take enough time off of work to make it worth it to fly somewhere that takes half a day of travel to get to? Look in places that are a short drive away so that you’ll actually use it throughout the year.
Furthermore, take into consideration what type of weather patterns take place in the location of your ideal vacation home. It’s probably not wise to purchase in an area that experiences a lot of hurricanes. Vacation homes are an investment, but by buying in a place that is prone to severe weather it can become very costly to cover maintenance and weather damage costs. Make sure to get quotes on what the insurance would look like. Before buying a vacation house make sure that you’ve spent a solid amount of time there. You should know if the area may offer you a boost in the future or if the economy may suffer and devalue the property.
Another thing to consider is whether or not you would rent the space. How often will you visit your vacation home and when would you stay there primarily? If you are going to rent it out then it can be an issue if the dates you plan on staying there are also the same dates that most people would want to rent it. Owning a vacation home can mean giving up your desired times to visit. Consider looking for properties that are located in places where you can visit multi-seasonal. It’s important to make sure that the community that the house is located in allows short-term rentals because some places do not. As long as you’re using the property personally for at least two weeks a year than a portion of the expenses cannot be tax-deductible.
So many people dream of owning a vacation home and it is entirely possible, however there are a plethora of things to consider. Think of the type of lifestyle you’ll want in retirement and calculate the carrying costs. Make sure to discuss things with your accountant and real estate agent and take everything they say into consideration.