Read these tips before you ask yourself if you're ready to invest in a home away from home.
I’ve owned a property in sunny Palm Springs for years, so I feel confident advising others about vacation homes. Having a second home for getaways sounds glamorous — and often it’s even a really good long-term investment. But don’t jump in blindly. Here are eight considerations to make before plunking down on a vacation home:
1. Spend time there first
Don’t buy a vacation home until you’ve visited the area several times. It sounds basic, but you better be sure you simply adore and can’t get enough of that beach town or ski village before you commit to buying there since you’ll be spending a great deal of your free time there in the future.
Unlike with hotels and time shares, owning a vacation home doesn’t allow you the option to easily change destinations if you tire of the scenery.
2. Know all your costs
Become familiar with the total price of owning your second home, including property taxes, insurance, and any other carrying costs. Even when it’s unoccupied, you’re still incurring water, gas, electrical, trash removal, landscaping, and other maintenance charges. Carefully factor these overhead costs into your budget; nothing ruins a perfect vacation home like being in over your head financially.
3. Who is going to watch when you’re away?
A specific expense for vacation homes is a management fee. If you plan to visit infrequently — and are considering renters while you’re away — make sure you find a local property manager to maintain your home. This service will cost some money, but so will any damage caused from neglecting those frozen pipes or leaky roof, especially if it goes unnoticed for a long period of time.
4. Not every day is a vacation
I dedicate the first weekend of the season to a spree of maintenance and repairs. In fact, a good number of your “vacation” days may be spent at the local home-improvement store. It’s a house, not a hotel, so it needs just as much year-round upkeep as your primary home.
5. You’ll want a rental income option
A smart vacation home purchase is one that incorporates rental potential into the equation. If managed correctly, many of your costs can be offset by rental income. From a long-term-investment standpoint, rental income may allow you to build equity and eventually pay off the property. Analyze nearby vacation homes, talk to local agents and vacation rental companies, and look online to see what’s renting (and for how much). And don’t forget to research occupancy rates; you’ll want to know how often your home will be vacant.
6. Holidays could be a battle
Many popular vacation spots are areas that have a “high” season. In Florida, winter is the high season, and in ski towns like Aspen, CO, visits spike from December to February. Seasonality becomes a battle when the rental demand for your vacation home collides with your personal time frame. If you’re planning on maximizing your home’s rental income, be prepared to give up some of your peak-season dreams.
7. Safety never takes a vacation
Check the local crime rates before you buy, especially if you’re going to leave the home unoccupied for long stretches of time. A break-in or other crime at your vacation home can be particularly frustrating when you’re not around. Take into account the cost of a security and alarm monitoring system to your budget if need be.
8. Getting there is (not) half the fun
How easy will it be for you to travel to your new vacation home? Your best option is accessibility — for me, it’s a two-hour drive door to door. While it may sound romantic to have a cabin high in the hills of the Carolinas, if it takes you two flights, a rental car, and a three-hour drive to get there, I can promise you it won’t get much use.