Buying a vacation home has never been easier! If you’re thinking about a vacation home or second home I’ll break down 10 top tips to help you get you started.
#1. Budget. When you’re considering an investment like a vacation home it’s very important that you stay within a budget. Before buying, calculate an estimation of what your mortgage will be if utilizing a mortgage. Down payments can range from 10% to 20% in many cases. Closing cost vary with an average range of 3% to 4% of the purchase price. Speak to a lender for a good faith estimate so that you are prepared.
#2 Additional cost. Many people don’t take into consideration other cost associated with the purchase. Things like home insurance, taxes, utility bills, and maintenance/care-taking of the property.
#3 Single family or condo. Both of these properties have advantages and disadvantages. I always suggest buyers right down the pros and cons for each. This will help you isolate which one best meets your needs. Condos offer a lock and leave lifestyle, extremely low maintenance, because the condo association takes care of everything for you. A Single family homes offer more flexibility and space. Second that can offer a bit more privacy. And third more potential to be a full time home in the future.
#4 MINIMUM RENTAL RESTRICTIONS.. If you intent to rent out a vacation home and you’re looking at condos, please know that nearly every condominium association has specific rental restrictions you will have to follow. Some allow for short term rentals, but others only permit longer time periods like 3 months or more. Some will even have waiting periods before you can rent.
#5 PROPERTY MANAGEMENT. Most of my clients who have purchased beach rental properties don’t have the time and desire to advertise the home, handle the lease, collect rent, pay taxes, and deal with ongoing maintenance issues. Property managers tend to charge between 8 – 10% of the monthly rent for their services. Owners that rent out a condo/home for less than 6-month periods are required to collect both a tourist development tax and sales tax – 12.5%.
#6 Location. Location is the first rule in real estate for a reason, and very much applies to vacation homes and rentals. There are two things to consider when evaluating locations. What type of location do you want for your own use, and what will renters want.
#7 Timeshares. Steer clear of time shares. Timeshares are horribly cost-ineffective. Timeshare have many rules, restrictions on use, annual maintenance fees and upfront cost. Many people grow tired of the property, its worn out condition and the fees. When it get time to dump the property it becomes very difficult.
#8 Hire a local real estate agent. You don’t have to feel like you’re on your own when it comes to buying your dream vacation home. A good local agent will help you steer clear of problems, point out communities you might not know about and hold your hand through the entire purchase.
#9 Invest in the property SOLO. In a perfect world, buying property with family or friends would be a pleasant, uncomplicated experience that would relieve financial burden. But unfortunately, when you invest in properties with others, things don’t always go as planned. These fights can start over when to sell, when and who to rent to, and sharing time at the property.
#10 Make sure you love it. At the end of the day, right now this home is for you, whether it’s a monetary investment or not. So, make sure that you love it.
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