There’s never been more interest worldwide in purchasing a second home than there is nowadays. Many credit the advent of home rental sites such as AirBNB and VRBO with this trend but owning a second home has always been considered a wish list item for the upper middle class or wealthy. But, you can’t argue with the fact that as more and more people rent someone’s home instead of a hotel for a vacation, the concept suddenly seems within reach for all.
Nevertheless, buying, owning and managing a second home should be approached with clear thinking and a game plan. It’s easy to get caught up in the idea while on vacation. But take a step back and make sure you’ve thought out the pros and cons before taking this big step forward in your personal financial world.
Coming from someone who owns several vacation homes, here are my top tips for success as you venture forward with this idea.
- Consider locations that are easy to get to for your family. Believe it or not, most vacation home purchases are within a 2 to 3 hour drive of one’s primary home, yet we dream about the villa in Tuscany or the seaside escape that’s a “short” 3 hour plane trip away. By focusing on a location that’s close drive away, you’ll find that you and your family are able to use the home more often. And using it more often means leaving your clothes & condiments and toys at the home, thereby making a quick getaway easy on the preparation side.
- Pick a location you love. If you don’t love it, you won’t go there. Think about what you love to do when you escape — enjoy hiking, golf and bird watching or going to restaurants, musicals and museums? There’s no right or wrong answer but spend time reflecting on your perfect weekend before homing in on a destination.
- Consider the financials. Though many people plan to save until they can buy a second home with cash, this may not be the best financial move. Consult a mortgage advisor who has experience in second home purchases to determine the best plan of action. Plan for not only the cost of the home, but property taxes, resort or condo fees and assessments, repairs, a caretaker if needed and other typical costs related to home maintenance. If you plan to rent the property, you will likely need to get investment financing which may come at a higher rate of interest. And with rentals, your maintenance costs will be higher though they will be offset with rental income. Don’t forget insurance, especially umbrella coverage if you will be renting (to protect yourself and your investment), the cost of creating an LLC if your financial and legal advisors recommend this, and management fees if you hire a rental management company.
- Look for properties that are already furnished. Many owners of vacation properties would love to sell you a turn-key home–it makes their lives easier and yours. Don’t hesitate to negotiate for any of the furnishings with your offer.
- Research property management companies early. You can start talking to management companies early in the process. Some such companies may also know of properties for sale that fit your criteria. They are a great resource and will help make your transition to second home ownership easy.
- Trust your advisors. Pick realtors and financial professionals such as lenders and accountants who know the second home market and are experts at the community in which you hope to buy. Listen to them and take advantage of their expertise. They will be your guides through this navigation.
- Think like a renter. If you plan to rent your home after purchase, think about what will make your purchase desirable for a guest. They likely will enjoy your home for the same reasons you do but consider top quality views, modern furnishings and great amenities (either at the home or nearby) that will help to bring you a steady income stream.
- Don’t wait too long on a property that seems perfect. Even though I recommend a cautious approach with any major purchase, if you’ve been waiting for a home with just the view you want or just the location off the main road, jump on it if it becomes available. Too often I’ve seen vacation home buyers too cautious and then miss the perfect opportunity.
Enjoy, get away, treasure your time in your vacation home. Visit your special place regularly (and not just for maintenance). Don’t forget what you love about your chosen location and home and make plans to get away several times a year or even more often — why not weekly or at least monthly? Invite friends, cook, read, relax and exercise. This is what life is all about and there’s nothing that will make it easier and more relaxing than your own getaway.
If you want to mull over the idea a bit more, Innsbrook Resort and Sarah Bernard Vacation Rentals is a conveniently located, gorgeous vacation rental community just waiting for you! Take a look at our inviting chalets and choose the one that’s right for you and your getaway, then book online or contact us today. The Sarah Bernard Realty Team is here to make your stay exceptional! 314-780-9070