Assuming you have the cash to buy a vacation home, you’ll need to figure out a great deal before making the purchase. Vacation homes can be difficult to rent out during seasons that you don’t spend there, and there’s no guarantee that the rental income accrued during off seasons will offset the cost of the home itself. It’s important to do your due diligence before making any major decisions.
Here are some tips that’ll help:
Know all the Rules
Unfortunately, not all homes can be used as rental property. Some condo/homeowner associations set rules for rentals, as do cities, and some resorts require residents to use their programs. If you plan on renting out your property, research all of the rules involved before buying.
Is it Affordable?
No, real estate is not a liquid investment- not even close. Given that you can’t count on being able to sell a home for a profit, it’s important to make sure that you’re able to afford the cost of the home, as well as the reduction in your savings.
Be Realistic When it Comes to Rental Income
Renting out a vacation home comes with expenses, and you’d be surprised at how quickly they add up. These expenses generally include cleaning between tenants, property management, advertising, taxes, and so on- so factor them all into your calculation of rental profit.
Know How Often You’ll Want to Visit
While this number may change over time, it’s important to get a clear idea of how often you’ll be able to stay in your vacation home before picking it out. It’s unwise to let your home to sit unoccupied for long periods, for several reasons, and you’ll want to get your money’s worth out of the purchase.
Develop an Emergency Plan
If you’re not going to be able to visit your vacation home with a fair degree of regularity, make sure someone else will be able to do so. A water leak can be disastrous for a house that isn’t tended to, and repairs in general need to be made quickly if you’re renting. These eventualities need to be mapped out before making the decision to buy.
Source: U.S. News & World Report