10 Top Investment Tips for Buying A Vacation Home

by admin on April 18, 2014

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This article touches on what should be done before and during the purchase of a vacation home. Keep in mind, a vacation home will primarily be used by others rather than yourself if you are committing to this while having a full time job. This type of investment is not for everyone, the tips below are helpful to guide you through the process.

1. Run the numbers early. Use an online mortgage calculator to learn how much you can qualify for before you get deeply into the search for your vacation home. Most home sellers will negotiate more readily with a pre-qualified buyer. And you’ll narrow your choices, saving everyone time.

2. Use a local Realtor. They will know much more about the area than you’ll be able to learn, even if you spend weeks studying the region. They may know what’s in the planning process for road improvements and other developments that could impact the home you’re considering.

3. Don’t view the home as an investment. The last few years have demonstrated that investing in residential real estate doesn’t necessarily provide a guaranteed payoff, especially if you plan to sell the home after a few years. Even though most vacation homes are in attractive locations, bear in mind that some vacation hot spots have two distinct populations. The second home buying market has deeper pockets than many of the full-time residents who work in service or support capacities, limiting potential home buyers.

4. Inflate the cost of ownership. Develop a budget for the home and include all your conceivable expenses. Climate and geography impact the cost of ownership. Homes near the ocean tend to experience more corrosion on metal and wood from salty air, while those in the mountains have higher incidences of roof and deck damage from heavy snow loads or severe thunderstorms. Include the likelihood of rising property taxes, utility costs and appliance replacement. Your travel expenses should also be a cost you consider in your ownership budget, and include one or two unscheduled trips in the event of emergencies that can’t be handled remotely.

5. Joint investments. Buying a home with a group of people will split the cost of ownership, but if you do, be certain that you’ve retained legal assistance to make sure that each owner’s rights to the property and the equity are amenable to everyone and the agreement is legally documented.

By: Glenn Phillips

Read the next 5 tips here!

 

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