For many families, having a vacation home to enjoy can bring them closer together and help create indelible memories for parent and child alike. Before you make the commitment to beachfront, lake, or cabin property, however, you must ask yourself some important questions about what you really want and what you can really afford.
Does the home fit into our budget?
Can you really afford the vacation home? Only you can know your true financial situation, but the best tip for most second home-buyers is to buy under budget. Don’t extend yourself on a vacation home.
For one, money tied up in real estate is just that – tied up. If you think you’ll need liquid cash in the near future, it may be best to wait on buying that home or lower your expectations. You cannot count on being able to sell it for a profit, and sometimes you may not be able to even sell it at all. Some families make a plan to pay for their vacation home through on or off-season rentals, and that’s a good plan, but you cannot count on this income to immediately flow. Most people severely overestimate the amount of time they will be able to rent it out and how much income they will generate from each rental.
In the end, you will likely need a 20% down payment and you don’t want your mortgage costs (for all your properties) to go much more than 30% of your total income. That’s a good place to start.
Am I OK with imperfections?
Some vacation homebuyers want a ready-to-stay, perfect home for their family. That’s ok for some families, but for others it may be better to look for properties with imperfections and opportunities to improve. That’s because premium properties are going to carry a premium price. If you have the ability to see potential in a less-than-perfect property, you can potentially get in at a cheaper price and maximize your investment once you make the renovations and repairs yourself.
Have I considered ALL the costs?
Your down payment and monthly payments make up the biggest chunk of the costs associated with owning a vacation home, but they certainly don’t represent all of the costs. Don’t cut too close to your budget with the property price until you’ve considered these “hidden costs”.
“You will also have to pay utilities, HOA or condo fees, property taxes, insurance and the cost of furnishing a new home down to the spoons and forks,” notes US News & World Report. Beyond that, you can expect to pay even more to furnish your vacation home with the appropriate activity aids. For example, if you buy a beach home you may want surfboards or even a boat. If you buy a house near a mountain resort, you’ll want skiing equipment.
What kind of vacation home will I want in the future?
Many families that purchase a vacation home keep that home for years – even decades. It is a valuable piece of investment property, after all. Before you buy another home you must make sure you’re not getting caught up in the moment. Is the home safe for your kids? Are there enough nearby opportunities for fun activities to keep them entertained? Do you have any physical limitations or progressing illnesses that will change your ability to maintain/make the most of the vacation home in the future? A vacation home cannot be 100% perfect for every person in your family but it is a major investment, so it should be as close to that as possible.
One thing you want to be sure of is a reliable internet connection in your vacation home. This is especially critical if you think you might want to rent the place when you aren’t enjoying it yourself, since it’s a must-have for many tourists these days. You can check the availability in the area to ensure that you will have access to a fast, reliable connection.
You’ll also need to consider the furnishings of the vacation home. You might want durable, easy-to-clean, inexpensive options for vacationers, but for family use comfort and personal preferences would rank higher. Once you make your selections, be sure to connect with the Athens Moving Experts to ensure each piece is handled with care.
There’s always going to be an element of spontaneity and whimsy when it comes to buying a vacation home–and that’s ok. But don’t get carried away. In the end, it’s the same as any other home purchase. Stick to a budget, know all of your potential costs, and think about your long-term situation before pulling the trigger.
Photo Credit: Pixabay.com