Most people who decide to buy a vacation home typically get the idea as the result of actually renting a vacation home instead of staying in a hotel. The home rental business is booming as vacationers can now search for homes to rent instead of looking at a hotel. A home is more relaxing and can be more cost effective compared to a pricey hotel room. But before you get too much further, here are three things you need to know about buying a vacation home.
Maintenance. You know that owning your own home also requires maintenance. When the hot water heater goes on the blink, you’ll need to call a service company or buy and install a new hot water heater. You have to pay utilities, property taxes and insurance on top of what pay each month on your mortgage. When you’re looking at a potential purchase, do some research about what the property uses in utilities each year. You can get that information from various utility companies. Second, you’ll need to have someone maintain the property while you’re away.
Second Home? Mortgage lenders make a clear distinction between a second home and a vacation or rental property. Technically, if you rent out the property more than two weeks in a year it’s a vacation home. A second home is one where you spend an extended period of time there and is at least 50 miles or more away from your primary residence. A vacation home can’t be one across town. The reason this distinction is important is that second homes require less down payment and ask for lower rates compared to a vacation or beachfront property.
Managing. If you do plan to rent the property while you’re away who will collect the rent each month? Who will answer the maintenance call when the sink disposal stops working? Who will show the property to potential vacationers? You might want to consider enlisting the services of an experienced property manager who can take care of all the day-to-day duties while you’re at home. Most real estate companies that sell and rent in vacation areas also provide property management services and they’re worth it.