Congratulations, you’ve reached a point in life where the dream of buying a second home may soon be coming true. But that dream can become an expensive nightmare if you let emotions override your good sense. Before signing on the dotted line, read our tips on searching for a vacation property that will serve your family for many years to come.
Rent First
Be sure you spend a lot of time at your favorite vacation spot before investing there. Renting a house is the best way to see if the location is really a good fit. Visit the area several times, during different seasons and holidays and during off-peak times too. Stay as long as you can, up to two weeks if possible. By experiencing the location under a variety of different factors like weather and crowds (or lack of them), you’ll get a clearer picture of future enjoyment.
Location…You Know the Rest
Most people buy a second home with the idea that it will be a gathering place for friends and extended family. A four-hour plane ride and car rental may not seem like that big of a deal to you, but it may prohibit others from joining in the fun. According to the National Association of Realtors, almost 90% of buyers purchase a vacation home that’s less than 200 miles from their primary residence.
Be Realistic
If you’re not already visiting your favorite vacation spot regularly, it may be unrealistic to think buying property there will change things. Owning a second home brings many new and costly responsibilities. Expenses such as property management, cleaning, and landscape upkeep add up quickly. Will you really visit the new property frequently enough to warrant all the extra headaches, or is renting actually the best choice? An honest, non-emotional assessment of your travel habits will help you decide.
Talking Taxes
The tax implications of a second home can be more complicated than those for a primary residence. If you plan on renting out your vacation home, you must pay taxes on that income. In some states, the property tax on a second home is higher than that on the first. Make sure you understand exactly how a vacation property will affect your taxes before making a purchase.
Determining the right time to buy, setting a budget, and hiring a property manager if you plan on renting to other vacationers are a few of the other factors to consider when deciding if a second home is right for you. Before making the final decision, you may want to explore alternative ownership options such as co-owning or see if you can make long-term reservations at vacation home you already love.
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