Whether you’re just dreaming about a vacation home or ready to start shopping, it’s crucial to consider a variety of factors before jumping into such a big investment of your time and resources.
Weigh Financial Implications
Be clear on your why. Are you searching for a personal retreat, strictly an investment property, or will it be a mix of both? Once you know your goal, establish a realistic budget that takes into consideration ALL the expenses of owning a second property. For example, your quaint seaside property might come with hefty insurance costs if there are higher risks of natural disasters like flooding or hurricanes. If you’re counting on rental income, plan for a reduction in that income stream to cover the costs of a property management company, unless you’ll manage it yourself. Also set aside funds for property taxes and ongoing maintenance costs. Finally, check with your accountant about the tax ramifications, especially if you’re receiving rental income.
Assess the Location
Location is paramount when it comes to purchasing a vacation property. If you’ve only visited during peak tourist times, will you enjoy going there as much when things have quieted down? Will all your favorite hotspots be closed in the offseason? Also consider seasonal weather changes. If you’d like to use your retreat all year, will you embrace the fall and winter as much as the summer? Distance is also a factor. If you plan on visiting frequently, is a long drive realistic with your schedule or will you need to build in even more time and money for airfare?
Consider Long-Term Needs
Most likely you’re thinking of a vacation property as a longer-term investment. If it’s mainly for personal use, consider your changing needs over the years. If your children are grade-school age now, will you still have open weekends for traveling when their schedules become busier? As your family grows, will there be enough activities at the vacation home to accommodate everyone’s evolving interests? Finally, zoom out 20 or 30 years. Will you mind scaling stairs to get to the master bedroom or navigating a dirt road to reach your cabin tucked deep in the woods?
A vacation home is an exciting endeavor! Before getting too far along in the dreaming, reach out to an experienced professional who can offer you a detailed market analysis to find the right property for you. Ready to explore the possibilities? Contact me to get started.
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