Should You Buy a Vacation Home?
Buying a vacation home may sound like the ultimate luxury. While owning a vacation home can be a great investment, both through potential rental income and through your own family memories, it's not a decision to be entered into lightly. Our real estate agents at Margaret Rudd & Associates, Inc. have created this list of six things to consider before you start shopping for a vacation home.
- Count the Costs
Before buying a vacation home, make sure you understand all the costs and can afford them. In addition to the obvious costs of the mortgage, you are going to need to pay for utilities, HOA or condo association fees, taxes, insurance and even furnishings for the home. In some areas you will want to add recreational equipment so you can rent the property as a fully equipped vacation home. Make sure these are all costs you can afford.
- Choose the Right Location
If you are ready to buy a vacation home, make sure you choose the right location. First, look for a location that is convenient for your own vacation needs. You may not want to jump on an airplane every time you want some time away with the family, so buy somewhere that you can drive to. Consider transportation before buying a vacation home, and make sure the vacation property is located somewhere you will want to visit over and over.
Second, make sure the home is in a location others want to visit, with a high potential rent income. When you're not at home, you're going to want to be able to rent out the home to improve your income.
- Have an Emergency Contact
Sometimes, emergencies are going to happen at your home. Have a local contact or property management company you can trust to check on the property and take care of any maintenance emergencies. This is particularly important if you are a long drive away from your home, or if you are buying in an area prone to storms.
- Have a Protection Plan
No matter how popular your area may be, there will be times when the home sits vacant. Make sure you have a plan to protect your home. In addition to security systems, consider putting lights on a timer to make the home look occupied, or ask neighbors to park in your driveway when you know the home will be vacant for a while.
- Understand the Taxes
Vacation properties are not as tax-friendly as your primary residence. Not only will you lose some of the tax benefits you gain with your primary residence, but if you make significant rental income, you might have to pay taxes on that income. This is not necessarily a reason to avoid buying a vacation home, but talk to an accountant so you can understand all of the ramifications.
- Understand Your Financing Options
You are not going to have as flexible of financing when buying a vacation home as you did when buying your primary residence. You are going to need a 20 percent down payment in most situations in order to get a mortgage. Talk to your lender before you start shopping for a vacation home to make sure the financing will be there.
If you decide that owing a vacation home is right for you, the North Carolina real estate market offers a number of beautiful communities for you to consider. Contact Margaret Rudd & Associates, Inc. to get started with the process of buying a vacation home.