You have decided to purchase your second home at your favorite vacation spot. It might be because you’re sick of renting or there is never anything available where you want to be. Before you jump the gun and make that decision, make sure you do your research! Here are 5 things you should know.
Find a good location
It is essential to choose a location that is central to the city square, beach, mountains, etc. You may not be living in your vacation home full time, so choosing a location close to the main attractions of that city is important in attracting potential renters.
Can you afford it?
You might think that you can afford the purchase price of the home but have you considered the extra expenses? If you live far away, you might have management fees to have someone look at your property. Add that to cleaning fees, vacancies if you can’t find renters, etc. Be prepared to do repairs as well is something breaks.
Have a plan for getting renters
It might not be as easy as you think to get renters consistently in your home. You might have to hire a real estate agent or different service to find, vet and negotiate with renters. Those services or agents might charge a commission, so that is something to consider as well.
Look out for tax traps
The tax rules for second homes can be confusing and complicated. When you are going through the purchasing process, make sure you are aware what the rules are for selling your house down the road, renting it out and receiving profits from it.
You might not be able to vacation when you want to
If you plan on renting your home out, you might want to vacation at the same time as your renters. By using your home during the peak season, you are losing money you could be earning by renting it out. You also might end up working on the house while you’re there, turning your vacation into a work trip.
Whatever you decide to do, it is crucial to have insurance to protect your property from your renters, the weather, etc. Contact us for a quote after you sign those papers!