Investing in a vacation home can be a great way to build equity and generate rental income. According to Redfin, average home sales prices in non-seasonal cities have increased by 13 percent. With inflation continuing to rise in the US, keeping your rental property for the long term is a great investment strategy. The National Association for Realtors (NAR) Vacation Home and Investment Buyer Survey separates buyers into two categories: vacation home buyers and investors.
Many people consider buying a vacation property while on vacation or soon after returning home. It is important to make sure that the vacation property you want to buy is in an area where rentals are allowed. Travelers are increasingly opting for vacation homes listed on websites such as Airbnb and VRBO. If you have never invested in a home outside of your primary residence, it is essential that you learn more about investing in real estate before taking the plunge.
With the ability to work remotely and educate their children virtually, many buyers sought second homes to escape their main homes and enjoy downtime away from the crowds. If the worst-case scenario occurs and there is a total slump in the housing market or tourism industry, you can at least use your vacation home for weekend getaways or family vacations. Homes in major tourist cities such as Miami, Lake Tahoe, New York, and San Diego are often better rented as vacation getaways than as family bases. Deciding to take out a second mortgage for a vacation home is an important decision that should not be taken lightly.
What really differentiates buying a vacation home as an investment from other types of investment is the dual purpose it serves. While a vacation home can be a big investment, there are intangible benefits that can't be measured.