Over the years, you’ve spent many happy summers at that lake, beach, or mountain resort. The kids think of it as a second home. Maybe it’s time to buy property there so the family can enjoy it for years to come.
If that’s your thinking, you are not alone. According to the National Association of Realtors (NAR,) vacation home sales accounted for 21 percent of all real estate transactions last year, their highest market share since the survey was first conducted in 2003.
But, suggest financial advisors, before you decide to buy that second home, consider four important questions regarding convenience and cost:
- How often will you use it? Surveys show most vacation homes are within two hours of the owner’s primary home. More travel time than that, and you may not choose to make the trip nearly as often as you thought you might.
- How much will it cost? In addition to the purchase price, consider annual property taxes and insurance as well as monthly utilities, trash removal, and maintenance services. For safety’s sake, you may want to add the cost of a security and/or alarm system, plus the cost for a property manager to keep an eye on the property when you are not in residence – and to handle rental services if you decide to rent the property.
- Will you rent or not? You may be planning to offset costs by renting out the home while you’re away, and that could be a worthwhile decision. But if you will rely on rental income to meet expenses, check first with local agents/rental companies to see what similar properties are renting for in the area and what the occupancy rate is like. Also, understand that if you rent during the region’s high or most desirable season – say, winter in a ski area or summer at the beach – you will limit the time you and your family will have the property available for your use.
- What about maintenance? – Your vacation home will likely need as much year-round upkeep as your primary home. Be prepared to devote at least part of your vacation time tending to repairs – or tack on the cost of keeping a handyman on retainer.
I hope you found these tips helpful. Contact us today with your real estate questions!