Have you fallen in love with a particular resort, got a little bit of extra money to spend, or you’re just dreaming of setting yourself up for retirement in a wonderfully warm climate? Maybe investing in a vacation home is the right plan for you. You might even be able to make a little bit of extra cash along the way. Here’s everything you need to know about investing in a great vacation home.
1. Don’t just buy for one season
If you haven’t already got your heart set on a location or even a particular resort, it’s worth doing some research on locations. There is a reason that areas such as Palm Beach Florida are so popular for vacation homes - they get great weather all year round, and the area is made for it. Choosing a home which is only amazing for one season - the one you’ll spend there - means you could lose out on all the rental opportunities during the time that you’re not there.
2. Choose for great rental prospects
If you want to make a bit of money back on your home, choose a home with great rental prospects. Yes, you might want a home out of the city, with no internet or cell phone reception, but the chances are that whoever wants to stay in your home when you’re not in town will want access to these amenities. Make sure the home is attractive to vacationers - right on the beach, plenty of beds, and an easy walk to all the fun things your location offers.
3. Do the math
Once you’ve chosen an area, you need to know what you can afford. You’ll need at least a 20% down payment, and don’t let your vacation home push you to the limit of what you can afford. Keep hidden costs in mind by overestimating your budget; there is no way to know exactly what realtor fees or maintenance charges to expect. Don’t allow yourself to be fooled into thinking that the property will pay for itself with rental - it’s impossible to guarantee that, and you could find yourself in hot water if renters aren’t forthcoming immediately.
4. Avoid timeshares
Selling a timeshare is tricky, even when the economy is strong, so you could end up tying yourself into something long-term that you don’t really need. It’s also an easy way in for scam artists, so unless you’re clued up on the art of timeshares, it’s best to avoid them at all costs.
5. Buy, don’t build
Many people are tempted to invest in a plot of land in which they can build their perfect vacation home, but actually, they could be setting themselves up for a fall. Building a home includes large amounts of upfront costs, and it’s difficult to coordinate from a distance. Then there’s all the restrictions, authorities, and planning permission required, which is all avoided when you buy an existing home.
6. Choose a reputable agent
Finally, when you’re working from afar, it’s crucial that you employ a reputable agent who you can trust to carry out your work, and who also knows the area like the back of their hand. They won’t let you make a bad choice, and you’ll feel comfortable leaving them to it.
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