5 Factors to Consider When Buying a Vacation Home

As spring comes around, the real estate market heats up, and some buyers are turning their attention to buying a second home as a vacation getaway.  

If you are considering doing the same, consider the following factors about purchasing your dream vacation home before purchasing your next property:

1. Location, Location, Location

As with your primary residence, the location should be first and foremost in your mind as you begin looking for a vacation home.  Buyers should choose a location that they will visit often enough to make the purchase worthwhile - or one that renters will want to occupy for a significant amount of time.

A home, even a vacation home, should not sit unoccupied for long stretches of time. By choosing a destination that has great attractions in the off-season as well as the peak season, buyers will be satisfied with their purchase for the long-term, especially if they plan to retire there later in life. 

2. Buy Under Budget

A critical mistake that many buyers make is to be swept away with emotion in the moment and purchase a second home that is beyond their realistic budget. The mortgage payment is only one consideration to make. A vacation home is still a home and as such will require as much care and maintenance as your primary residence.

If you will not be on-site regularly, consider the costs associated with hiring a property manager to check-in on the property and arrange necessary emergency repairs, lawn care, and maintenance in your absence. Other costs to include in the budget include travel to and from the vacation home, entertainment while visiting, and monthly costs associated with the home's homeowner's association or club memberships. The purchase of real estate can be a sound investment but it shouldn't break your budget.

3. Know All the Rules

The vacation home may be part of a homeowner's association (HOA). Buyers should be aware of all the rules that govern the property.  These rules, available in a document called covenants and restrictions, will spell out all of the rules surrounding the use of the property.  Some of these are quite restrictive and regulate how often, if at all, the property can be rented out. 

4. Be Conservative when Estimating Rental Income

Many homeowners with a second home count on rental income to help cover the mortgage on a vacation home. When estimating rental income for budgetary purposes a buyer should be conservative in the estimation.  First, ensure that the community allows owners to rent the home.  Make sure that your budget includes property management, cleaning, and repair costs that will come about during the process of renting and re-renting the property to vacationers.

5. Plan for Vacancies and Emergencies

Even if you rent the home frequently, there will be times when the property is vacant.  Consider hiring a trusted caretaker or professional property manager to check on the home in your absence. Costly repairs such as broken water lines, a faulty HVAC system, or storm damage can be less expensive to fix if caught early. 

Buying a vacation home may be a dream come true for many homebuyers.  When all the circumstances are carefully weighed, a vacation home can b a sound financial investment when planning for the future.