You have done well financially and you have some money saved for a special purpose which is to buy a vacation home. You and your spouse have decided that you really want to take the plunge and have worked through the plan for it.
Now you need to look at the specifics to make sure you make the right purchase. The questions you should ask yourself about buying a rental home can keep you out of trouble and get you into a home you will love for years to come. But knowing the questions can sometimes prove difficult. For this reason we have pulled them together here for you to go through with your spouse. This is what you should look for when you are interested in purchasing a rental home.
Be Honest About How Often You Will Use the Rental Home
The idea of owning a rental home can be sexy and alluring. You imagine having your own place maybe in some exotic location, or in a ski area that is perfect to accommodate your love for winter sports. But buying a home is a big commitment and involves lots of money being spent and having to care for and maintain the property. For this reason, you really need to be clear about your intention for the home and how often you will actually use it.
If the idea is to go there on a regular basis over many years, then purchasing the rental home may be a great idea. But if you are only infatuated and this love affair will likely wear off in a short while, then renting in that city is definitely a smarter choice. Before you purchase, you need to have visited that city several times at least and found it is a place you really love.
Location Makes a Lot of Difference
The further away you have to travel to get to your rental home, the less are the chances you will utilize it regularly. Having to take a plane ride halfway around the world to get there will preclude you from any weekend trips there and if you plan on getting your relatives there with you, coordinating a time when everyone can travel for extended periods will not be something that can be done easily or consistently.
If you like a beach type area look for beaches closer to you. Instead of buying a place in Bali, think about the Caribbean, Hawaii, or Florida. If you love skiing on the French Alps, Vancouver or Colorado are excellent ski locations as well. Consider how often you want to go and who you want to tag along and it may help you determine where to buy.
If You Intend to Rent it Out Location is Even More Important
More than 25% of vacation home owners intend to rent the home to others. If you intend on doing this, you need to consider where you purchase your home and make sure it is in a location where there are a lot of renters. Look for places with lots of tourists. Also purchase in a location that has tourists throughout the year. If you buy in a ski town there may only be renters there when you want to go and your home will sit empty for the rest of the year. Finally understand the rental laws where you buy your home. There may be restrictions on how you can rent and to whom. Also, understand rental laws and the rates owners charge for a property like the one you intend to buy.
Finally, take your time before you buy. Plan on spending one more trip to the city your want to purchase and stay in the home you intend to buy. Make sure you love it. You may be excited about your purchase, but understanding every aspect of it will make you a happy buyer.