If you have a lifelong dream of owning a vacation home, now is the time to set your dreams in motion. Get the ball rolling with a little research. By doing your research, you know what components to take into account when searching for vacation properties.
1. Know the Costs
Make sure you know the costs before purchasing a vacation home. In addition to the monthly mortgage payment, you'll need to pay homeowner's insurance, property taxes, maintenance expenses, and association fees.
Depending on the area, you may need to purchase more extensive insurance on the property, such as as earthquake or flood insurance, to keep the property protected during a natural disaster.
Don't forget to consider the cost of utilities; even when not occupied, you still need to have electricity, water, and sewer service to keep your vacation home in good condition.
2. Decide How You Want to Pay for It
Once you've found a vacation home that meets all of your needs, you must decide how you want to pay for it.
One option is to pay for the home out of your monthly cash flow. This option requires that you have a great deal of disposable cash each month.
Another alternative is to rent the property out and use the proceeds to cover expenditures related to the property. The downside of turning your property into a rental unit is that it prevents you from taking impromptu trips when you have a free weekend. However, even renting the property for a portion of the year helps offset the costs.
You can also look at your vacation home as an investment. Instead of socking money away in an IRA or brokerage account, you use the money to purchase property. Property and land usually appreciate over time.
3. Figure Out How You Will Maintain the Property
Unless you live extremely close to your vacation home, it is likely that you will need some help maintaining the property. You have a few options when it comes to keeping your vacation home in pristine condition.
The first option is to hire a professional caretaker to look after the property. You can even offer to let the caretaker reside in one of the rooms as part of the caretaker's salary, or you can request that the caretaker reside off the premises. This provides your home with full-time attention.
Another possibility is to hire a property management company. This is a smart alternative if you plan on renting the property. The property management company handles both upkeep on your vacation home and renting it out.