Vacation Home or Rental Property?
If you are thinking about purchasing a beach house, city condo, mountain cabin, or other vacation property, let us help you do your due diligence. There is a lot to consider when owning a second home and you want to enjoy the property, not be burdened by it.
The first thing to consider is what your goals are for the property. Will it be strictly a retreat for your family and friends, or do you want to earn rental income when you are not using it? If you are entering the rental market, find out what months are the high and low season for visitors. Will this conflict with your personal use of the property?
The size of the property is another consideration if you want to rent it out. You may need three bedrooms for your family to vacation comfortably, but the rental market may be much higher for two-bedroom properties. You need to weigh what is more important to you.
When figuring your budget, you need to know what resort fees or taxes you will be required to charge visitors, liability insurance policies you may need, costs for regular repairs and maintenance, and refurbishing household items that disappear or wear out often.
Make sure you know the area laws or neighborhood rules on renting your property. Some neighborhoods do not allow short-term rentals of less than a month, others don’t allow less than a week. Some restrict the time of year, the number of people, or whether pets are allowed.
If you will want to rent your property, make sure you get a referral to a reliable property manager, handyman, and cleaning service that can assist you in between guests.
As you shop for properties, find out what HOA or deed restrictions are in place. If you are looking at condos or townhomes, are assessments charged for major improvements like a roof replacement, storm damage, or structural repairs, and when is the last time that happened?
Is there planned construction or development in the area? You don’t want to fall in love with the view of the porch of your cabin, only to find out a new complex is planned to be built below you.
Consider the ease of getting there. If you can load up the family, a few bags and groceries, and get to your vacation home with relative ease, you will be far more likely to use it often than if everyone arrives stressed out. Ideally, you want to have recreational gear and some basic provisions stored at the home so you can just pack a few clothes and perishable goods.
Make sure everyone is all in. Nothing spoils a good time faster than having to force the idea on your children or spouse. If everyone is complaining about having to go rather than looking forward to the next trip, you have a problem. There are different philosophies on family vacations. Some families like to explore new places all the time. For them, a vacation home may not make sense. But, if your family philosophy is revisiting the same beloved place year after year, and creating memories there, then a vacation home may be perfect for you.