Are you considering taking the vacation home plunge? Do you fantasize about weekends spent at the beach, soaking in the sun and having fun with friends and family? Buying a vacation home is certainly one of life’s most wonderful luxuries. However, there are a few things you should consider before you decide to make the investment.
What can you afford?
If you are taking on a second mortgage or even paying all cash for a vacation home, it’s important to crunch the numbers. Just how much can you afford to pay for your new home? Lending practices have gotten much more stringent in the last few years, and many require a hefty down payment totaling at least 20 percent. In addition, be sure to include all the hidden costs that will be included in owning a vacation home, such as taxes and insurance and perhaps even a caretaker to watch over your property while you are out of town. Be sure to take the time to look over all your finances and factor in all costs to determine exactly what your budget should be for your second home.
Does the location fit your needs and lifestyle?
How do you intend to use your vacation home? Do you want to be close to the beach, or the mountains? Is cooking in a gourmet kitchen a priority? Do you want to be close to the nightlife or popular restaurants? You may also want to consider what your needs will be in 10, 20 or 30 years. Is it big enough for a growing family? Can you see yourself retiring there? Be clear about your priorities and visualize how you will use the property over time.
Do you want to earn rental income from the home?
Vacation homes can be a great way to earn extra money by renting them out when you are not there. If you plan to invest in the home long-term, the rental income can help you build equity and pay off the home. However, it’s important to know what the rental market is like in the area where you want to buy, including how much homes rent for and how often people are renting.
Should you consider joint ownership?
If a vacation home is a little outside of your financial reach, would you consider joint ownership with a friend or family member? Consider how strong your relationship is with your potential co-owner and whether or not it can withstand the responsibilities of joint home ownership. If you do decide to enter into a joint ownership relationship, be sure to write up a contract that clearly states everyone’s responsibilities, and what will happen if one party wants to get out of the arrangement.
Buying a vacation home is one of life’s great joys, although it can come with its fair share of challenges. Let the Laguna Beach experts at The Stanaland Group help you with your second home purchase. We’re available to guide you through every step of the process to help you attain your dream vacation home.