Home Buying in Glendora>Question Details

Excitedtobuy, Home Buyer in California

Would you recommend purchasing a Vacation home with Cash or financing a portion of the home?

Asked by Excitedtobuy, California Tue Apr 14, 2009

The plan is to rent it out as much as possible to help with Prop. tax and utility cost. We also plan on staying there as much as possible, mostly during the summer months. Just curious on the tax benefits or non benefits of owning the home out right. thanks

Help the community by answering this question:


I believe if you can, cash is a good way to buy vacation home so you won't have a monthly bill unless you need a tax shelter for income. This way in case something negative happens unexpectedly, you won't have to loose the home & you'll have a source to pull some cash for use.

I hoep this is helpful. Best wishes.

Always There for You,

Sin-Yi Chao Lambertson
Broker Associate
ERA Yes! Real Estate
Yes Mortgage & Escrow
626 963-0097 x218
0 votes Thank Flag Link Wed Aug 19, 2009
Your welcome. Let me know how else I can help.
Diana 909-945-5763
Web Reference: http://www.dianam.com
0 votes Thank Flag Link Thu Apr 16, 2009
I want to thank all of you for the replies! The home is being purchased for 460000, we're seriously considering buying the home with Cash. We will have about 270000 left to invest. Similar homes in the area have brought in anywhere from 20,000 to 50,000 in rental income. We'll most likely use the place half of June, most of July and a couple of weeks in August. It will be up for rent the majority of the rest or the year with us using it on weekends it's not rented. I may just call some of ya.. thanks again!!!
0 votes Thank Flag Link Wed Apr 15, 2009
This is a great question for your financial planner. If you don't have one you should get one. They can explain the different benefits to you.
You always want your money working for you and since each persons situation is different and weather they are conservative or want to do other things with their money would all have an impact on the answer. What you financial situation is and your wealth portfolio consists of also always makes a difference.

Good Luck
Diana 909-945-5763
Web Reference: http://www.dianam.com
0 votes Thank Flag Link Wed Apr 15, 2009
Your vacation home is no longer a vacation property if you are going to rent it out for then it becomes an investment property. Your deductions or write-offs are going to be different when you compare it to a pure vacation property.

Investment properties, to maximize returns, must give you the highest IRR (Internal Rate of Return) and Capital Accumulation of Wealth. This you will only achieve by leveraging your purchase to the maximum possible. In simple terms, you need the highest loan to value, or get a loan with the lowest down payment.

If you like, give me numbers for purchase price, down payment, type of loan you intend to get and I will run them to give you specific IRR and Cap. Acc. of Wealth numbers. Use this to compare different properties and options that you are considering. These numbers will also be compared to when you make a cash purchase. The importance of leveraging would then be evident.

Bob Khalsa, CCIM, MBA
Broker Owner
United America Realty
0 votes Thank Flag Link Wed Apr 15, 2009
Most investors will pay cash, however, I've helped some realize (with the help of their tax consultant) that the true cost of the financing is lower (after benefits) than what their investments are returning. If you would like to get into more detail, contact me at 626-890-7484, or through http://www.GlendoraHomes.com

Thanks, Aaron Miller
0 votes Thank Flag Link Wed Apr 15, 2009
You should always pay cash if you can unless you have a place to invest your money that will make you money.
I am in a vacation home area of Western NC (Murphy NC) where we have mountains and fishing, boating and lots of nature. From here if we want a weekend away we can run down to Florida for a little fishing. Most of my clients pay cash unless they are investors also. Then they put 20% down and finance. One place to call home base and another to buy like a repo to clean up and resell for profit.
I hope that helps. Feel free to call me if you have any questions.
My cell# is 828-837-0991.
Big Frank
0 votes Thank Flag Link Tue Apr 14, 2009
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