Life would be so much easier if you just owned a home in your favorite vacation spot, right? Umm, maybe. As with most decisions in life, you get a little bad with the good. But when it comes to making such a monumental move as purchasing an entirely new home just to play in, you need to get it right. While it isn’t our intention to be a bunch of bossy pants, here are eight considerations you should ruminate before pulling the trigger.
One big difference between the real estate market and stock or bonds is that you can’t always sell it exactly when you want. It’s an illiquid asset that might take years to unload. If you get in a financial jam will you still be able to continue to make the mortgage payments? That’s a serious question to ponder. Also keep in mind that preferred vacation spots like Florida, Arizona, and California saw houses lose half their value or more during the Great Recession of 2008.
2- Rental Income
Many people who purchase a vacation home intend to rent it out when they aren’t using it, hopefully earning enough to pay the monthly mortgage in the process. The thing is that, even in a vacation mecca, you can’t count on keeping tenants in it all the time you’re not using it. It’s going to sit vacant part of the time. Maybe a lot of the time. In addition, you will run into costs like cleaning, maintenance, and property management, if you choose to go that route.
3- Those Pesky Rules
Another common feature of popular vacation areas is that your new home might fall under the jurisdiction of a Homeowner’s Association (HOA). While you might own the structure, they make many of the rules. There may be standards for yard maintenance and even interior fixtures. Make you sure you understand (agree) with all this before getting serious.
4- Additional Expenses
If you thought you were done with costs after you turned a check over to the seller, think again. There will also be property taxes, insurance, home furnishings, utilities, and maybe HOA or condo fees. Plus expect renters will want snowboards and skis if it’s a winter resort area and surfboards and kayaks for the beach.
5- Location, Location, Location
Is the potential vacation home located in a place you REALLY like and will visit often? If you like to scatter your relaxation around to different locales, buying a house in one area could become a potential albatross around your neck. If you’re not sure you want to head to that spot at least once a year, maybe it’s better to hold off on purchasing.
6- When the You-Know-What Hits the Fan
You’re going to need to find someone you trust to keep an eye on the place when you aren’t there. Vacant buildings have a tendency to experience maintenance issues that can quickly escalate to disaster proportions. What if a water line bursts? Or maybe there’s a hurricane on the way and someone needs to cover the windows with plywood. Got someone in mind to do it?
7- Near or Far
To make sure you get the most use out of your vacation home, carefully consider how far it is from where you live. According to a National Association of Realtors (NAR) survey, the median distance from a vacation home is 200 miles, which is well within driving distance. You might not get full use of a vacation property if it takes an entire day of driving and connecting flights to get there.
Nobody likes to think about this aspect of homeownership but crime is a fact of life. It pays to visit a website to take a look at crime stats in any area you’re considering. A security system with alarm monitoring might be an added but necessary expense. And if the area makes you nervous, listen to your gut and don’t do it.
The Bottom Line
Buying a vacation home is something many people dream about, but few people do. However, if you’re one of the motivated minority, more power to you! Just don’t get in a hurry. “Do your homework, pick the right place, and it could be one of the best decisions you’ll ever make,” said Residencial Casa Linda.