The cost of owning and maintaining a vacation home is no small expense. You'll be paying for another mortgage, plus property taxes, insurance, and utilities, just like you do with your primary residence. This could mean you have less money to save for other things. If you have questions about buying, selling, or renting during COVID-19, it's important to do your research.
It's also important to take the time to look into the rental market in the desired location if you plan to rent out your vacation home. Recent figures from the National Association of Realtors show an increasing number of second homes being purchased for investment purposes, with rental properties outnumbering holiday homes by a large margin. In short, if you're looking for a place to return to regularly, buying a vacation home is a smart move. Before you make the purchase, consider how you'll use it, how often, and whether or not you'll rent it out.
For example, if your vacation home will be in an area popular with retirees, you may need to make your property more accessible. Homes in major tourist cities such as Miami, Lake Tahoe, New York City, and San Diego are often better rented as vacation getaways than as family bases. Buying real estate in an unfamiliar area or even one where you've been vacationing for many years requires expert guidance, so make sure you work with an experienced local real estate professional. As with buying a personal residence, vacation home buyers can check websites such as Zillow, RedFin, Realtor.com, and MLS to research different markets and consider pricing.
With a vacation home, you can receive tax benefits for mortgage interest and property taxes if the home is used as a secondary residence. Additionally, determine if you have the financial resources to renovate your future vacation home in a way that fits your specific needs and preferences. There's much more to consider when buying a vacation home than just the fact that you like the area. Many people decide they want to buy a second property after returning from an enjoyable vacation.
When looking for places for a vacation home, set a realistic maximum of how much you are willing to offer in a home. Buying a vacation home may seem like an expensive investment at first glance, but it can be worth it if you plan to rent it out and collect passive income.