Did you fall in love with your last vacation destination and know that you absolutely must buy a home there so that you can recreate those magical experiences? You’re not alone. According to the National Association of Realtors’ 2015 Investment and Vacation Home Buyers Survey, “vacation-home sales catapulted to an estimated 1.13 million last year, the highest amount since NAR began the survey in 2003. Vacation sales were up 57.4 percent from 717,000 in 2013.”
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Purchasing your own piece of paradise is an exciting opportunity, but there are many important factors to consider before taking the plunge and buying a vacation home. Here’s a checklist of key considerations that will help ensure your and your clients’ success.
What kind of travel are you committing to?
It’s time to go on vacation, so you drive two hours to the airport for a three-hour flight, pick-up a rental car, and then drive two more hours to your dream cabin in the woods. Really?
Now think about hopping in the car and driving only three or four hours to your dream cabin in the woods. The enticement of owning a vacation home is that you will actually go on vacation — easily and often.
The location, ease of access and how often you plan on using it are paramount components in this endeavor. If it’s too far away, then you might not use it as much as you originally thought you would.
Take some time to plan out the traveling logistics of your special getaway spot. Traveling far away can be welcome at times, but think about why you are buying this vacation home, and would you like to be relatively close to it?
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How are you going to use the vacation home?
Is it going to be a yearly summer spot for extended family or a romantic weekend getaway? Will you need three bedrooms or is 500 square feet enough space?
Research the Four Seasons. Will it be too hot to go golfing in July? Do you want to participate in the local, yearly half marathon? Having a clear idea of what you want, who’s going to use the home and the purpose of it will be extremely helpful in the overall process.
Hire a local real estate agent to learn all the ins and outs of a particular area.
Sure, you know how great it is in the summer, but did you know that every winter they shut down the roads due to flooding? What about the naked bicycle club organization that meets up once a month next door?
Or how about the new sewer plant that’s being built down the road? Real estate agents are invaluable, and your local expert will share insights and interesting facts about the neighborhoods.
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To rent or not to rent?
Many owners are open to renting their vacation home when possible. If this is appealing to you, do your homework.
First, contact a property management company. Find out the rental amounts, and the rules and regulations for a particular area. Is there a peak season? Will you need to give up some of your vacation time so that you can make some money when rents are hot?
Some associations and resort communities don’t allow rentals — so do thorough research. If you’re not going to rent it, who is going to keep an eye on it?
Property management companies are excellent sources of information and offer different services including lawn care, monthly check-ups, etc. You’ll want to make sure someone is looking in on the house because sometimes roofs leak, water tanks crack, etc.
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How are you going to finance it?
Make sure you fully understand the financial implications of owning a second home. Consult with your certified public accountant and your financial planner.
There are different tax rules that apply depending on the breakdown between personal and rental use. Keep in mind that there will be maintenance costs for upkeep and repairs on the home. Create a budget, and be prepared for the expenses.
Taking time to research the necessary elements in buying a vacation home is smart and will go a long way in protecting your investment. This is your investment in creating experiences and unforgettable memories for you and your loved ones for years to come. Now, isn’t it time for a vacation?
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Debbie Biery is the Expansion Ambassador with eXp Realty. You can follow her on Twitter or LinkedIn.