With the holiday season approaching, your mind may be daydreaming about getting away to a vacation home. In fact, maybe buying a vacation home is on your holiday wish list this year. While purchasing a home away from home can be a wonderful investment, it should not be taken lightly. Here are some things you should ask yourself if you’re deciding whether or not to buy a vacation home.
Can I afford it?
First of all, it’s important to know whether or not you can actually afford to purchase a vacation home. Understand that lenders often require a higher credit score to purchase a second home. The interest rates for home loans may also be higher for vacation homes. For many buyers, paying cash for a vacation home is the best option. Do you have those resources available?
Will you share the cost?
If you’re not sure that you can swing the cost of a vacation home on your own, then you may be tempted to share the cost with others. This could include family members or close friends. Keep in mind that buying a vacation home is a huge financial commitment. Are you ready to enter into that kind of relationship with your family or friends? How will the costs be split, and how will that affect how each party can use the property? These are all questions that should be answered before you buy a vacation home with other people.
Does it fit my lifestyle?
While it can be exciting to imagine life in your vacation home, does it really fit your lifestyle? If you have a family with young children, are there enough amenities nearby that will satisfy everyone’s tastes? What happens when your children are grown? Will you still want to visit this house then? You should also consider whether it fits your lifestyle if you’re nearing retirement age. Does the area cater to older adults in terms of culture and entertainment? Are there medical facilities nearby?
How often will I use it?
Many buyers who purchase vacation homes have pie-in-the-sky ideas about how they will use their property. But are those ideas realistic? How often will you be able to get away? Is this a place that you’d like to return to again and again? Think about how far away the vacation home is, and how that will affect your ability to visit it on a regular basis. And remember that vacation homes need regular maintenance, too. You may need to hire someone to keep the property maintained if you are only visiting a few times a year. Consider giving your vacation home a trial run. Rent out another property in the same location and see how often you actually use it. It will help to inform your future purchase.
Will I rent it out?
Finally, consider whether or not you’ll rent out the home when you aren’t there. Although it can be appealing to have that extra income, it doesn’t come without challenges of its own. Be sure you know what the tax laws are regarding rental income. And understand that you will need to put time and effort into finding renters and keeping the home maintained while others are living there.