There’s a ton of good reasons why you should get yourself a vacation home. But just like when you’re buying any property or home, it’s going to be a commitment in itself. However, a vacation home isn’t just any other home, and you’re certainly not going to stay there permanently. Whether you’re going there with your fiance, having a good time with your family, or eyeing the area to be a rental business, there are several things that you will need to consider.
Since vacation homes have a different function from your typical home, it’s bound to be part of a particular category of mortgage loans for non-primary residences. In some states, vacation homes that are turned into rental businesses will have three times as many property management fees than your typical apartment rental business.
There’s so much more to vacation houses than what you might think. While it may seem like just another dreamy vacation retreat, there are taxes, financing, and other factors that will need to weigh in. Before making any final commitments to getting yourself a vacation home, here are some things that you should know first before making any decisions.
Factors to Consider
When buying your own vacation property, you’ll need to take a step back and think things through. It never hurts to do your own research first on the topic and make sure that you have the necessary funds for everything, especially that you might have to finance it long-term.
Here are some facts that you will need to consider before getting a vacation home:
- Most vacation homes are situated in popular locations. Real estate values that are usually located in these locations will steadily increase as time goes by. Even if you’re not renting it out to guests, you’re still effectively gaining wealth.
- Most individuals would make their vacation home into a rental business. For vacation homes situated in tourist destinations, this can quickly become a serious central business establishment that can be invested.
- You might be able to get tax breaks from an interest in mortgage and property taxes. If you aren’t primarily using your vacation home as a business.
Likewise, buying a vacation home will have its own repercussions. Although this shouldn’t put you off, it’s still important to be aware of what you’re getting into.
- Since it’s a non-primary home, you are essentially paying for taxes, utility costs, and other monthly expenditures for two homes. Although you might not be using the vacation home as frequently as your primary home, you will still have to pay the same amount of taxes.
- Vacation homes are known for being an uphill battle in terms of financing. Most lenders will have a protocol of charging a higher rate and have a more demanding down payment than your primary home.
- Since you’re the proprietor of the property, maintenance will be your responsibility. If any incident does happen on the property, you will need to oversee this issue yourself.
- In some cases, property managers can be hired to take care of your non-primary property for you, but the rate is higher. That can be offset with most property owners turning their property into a rental vacation home.
Naturally, real estate isn’t an asset that can be sold in just the blink of an eye. If you are planning on selling your property, you’re bound to sell it at a significantly less price than it was initially worth. Most experts would suggest that you shouldn’t buy an extra non-primary home, unless you’re already incredibly rich and you can buy whatever you want, then by all means. But for the average middle-class family, it doesn’t seem practical.
Speaking of liquidating assets, if you’re looking to move out of your county and selling your home fast so that you can finance your vacation home, there are responsive and fast real estate agents that can help you with that. Don’t worry, we understand that this might be your first time with a homebuyer, but they’ll be doing all the heavy lifting for you, especially in repair and getting a potential property buyer in no time.
Overall, buying a vacation home is quite situational, and it will depend on how you perceive most of these facts. It’s best not to get too dazzled by the sceneries of a vacation home and think of the long-term of your finance when you’re getting one. Essentially, you’re
So unless you’re someone who earns a fair amount of funds annually through different streams of income, you might want to consider getting two properties simultaneously. While vacation homes might be the dream home for most individuals, you’ll need to be realistic with your finances.