March 9, 2020

Is Buying A Vacation Property The Right Move For You?

Before you go ahead and spend your hard earned cash on a vacation home, there are a few things you should know. Buying a vacation property is a huge expense and something you need to make sure is right for you before you go ahead. Below, we’ll go through a few things that could help you to figure out if this is a good idea. Take a look!

How Often Do You Visit?
Perhaps you visit the place often enough and you think that it warrants buying your own place there. A house is still a house, and there are still year round responsibilities that you have to carefully consider. You may only visit there a few weeks or even months out of the year, but it’ll often cost you as much if not more than your first house. You’ll also feel really guilty if you vacation elsewhere, so this means you’ll likely avoid visiting and enjoying new places.

The best thing you can possibly do? Give the idea of your second home a bit of a trial run. Rent out a place you’re considering if you can or a place nearby and see how you feel about it.

Will It Suit Your Retirement Lifestyle?
Many people and couples consider buying a vacation home so that they can live in it upon retirement. However, you need to be sure it’s going to suit your retirement lifestyle. Buying a retirement place before you actually retire can have retirement benefits. You’ll qualify for a mortgage easier when employed, and you’ll get a headstart when paying it off. Plus, you’ll be able to settle in and make changes if you want to. Road testing the house that you plan to spend retirement in is even more important than testing out a house you were planning on vacationing in. If you’re testing out your potential retirement home/area and it still feels like a vacation, you probably haven’t stayed long enough.

Make sure you also consider things like culture, services, amenities, nearby stores, transport, entertainment, and so on.

Consider Tax Laws
You may be excited by the prospect if having extra cash flow through rental income. These homes can sometimes help people to build wealth when they rent them out when they are not living in them. Making extra money by renting out your vacation home could be an option for you and could keep things moving along nicely.

Before you go gung-ho with this, however, you need to take into account tax laws. If you rent your house for 14 days or less, then you won’t have to report rental income on your tax return. If you rent longer than two weeks, it’s a business for tax purposes according to the IRS. Look into sales tax laws, rental times, business permits, and anything else you may need to know about before you go ahead with this.

Access To Other Vacation Homes
The idea of never vacationing anywhere else may bum you out, but if your second home is located somewhere others may like to visit, you may be able to arrange a trade in another region - a home exchange. In some cases, you may only need to swap a week in your vacation home to enjoy a couple of weeks elsewhere. Providing the swap works out well for both parties there’s no reason you can’t do this.

If you’ve decided that this is a good idea for you, you’ll need take the following steps:
>> Determine where you’d like to buy - look at resort areas and their properties, as there will be a range to suit various budgets.

>> Establish your price range - your vacation home should not be a source of financial stress for you. If it will be, then it’s probably best to avoid the idea altogether. Make sure you know your numbers well.

>> Consider fractional ownership - fractional ownership is an alternative that allows a purchaser to more closely match their projected usage of the property with its cost.

>> Find a local realtor - finding an experienced, local estate agent will be invaluable to your dream. They will help to guide you through this complex process, find financing, and manage the property when you cannot be there.

There’s a lot to think about, and if you make the wrong decision then there’s no doubt this will impact you negatively financially and take up a lot of your time. Ensure you’re making the right decision and you will have a place you love for life!

post signature
Follow Me:  Facebook | Instagram | Twitter

No comments:

Post a Comment

Powered by Jasper Roberts - Blog