With winter just around the corner and freezing temperatures arriving early in many states, some may be thinking of their future dream vacation home. According to the National Association of Home Builders, 7.4 million Americans own a second home as of 2016. Most of these buyers will fall between the ages of 62 and 91 according to the 2017 National Association of Realtor’s Investment and Vacation Home Buyers Guide. Here are five things to consider when eyeing up the housing market for your vacation home.
Understand your budget
Before getting serious about the vacation home buying process, it is important to fully understand whether or not your budget has room for the purchase. Not only should you be considering what can fit with your current financial situation but also what may happen if unexpected costs arise or if the housing market changes rapidly. These are great conversations to have with your financial advisor to gain a clearer picture of potential scenarios that may impact your decision.
Location is the most important word of real estate and for good reason. The market you choose for your vacation home will have a big impact on price and use cases. Buyers should consider what their ideal purpose of the vacation home will be and how that market is suited to those needs. When looking at a vacation home as an investment, it is also important to think of how the investment will fare over time. If you are able to get into a neighborhood that is flourishing with local growth expected in the coming years, it may be worth spending extra for the possibility of the home gaining value down the road. Also, if you are planning to rent the home out when not being used, consider the health of the rental market in that area and how easy it will be to find quality renters.
Rent before you buy
If you have a location picked out and are close to purchasing, it may be wise to set up a trip to the area. By spending an extended period of time in the area you will gain a far better outlook on how much you will enjoy your future vacation destination. Take note of the small things that may impact you on future visits or on an eventual full-time move, such as local dining options, traffic levels, and other vacation goers.
Other costs to consider
Beyond the purchase and loan price of the home, do not overlook the costs associated with actually using your vacation home.
If you are in a remote location, think about the additional travel costs such as increased airfare and ground transportation compared to a more popular area.
Maintenance costs should be considered prior to purchasing your vacation home. Research the local climate and work closely with a realtor from the area to discover costs that may arise in the future.
Remember to account for differences in tax and insurance costs compared to your primary residence when researching your vacation home. These can often catch vacation homebuyers off guard due to unfamiliarity with the area.
Plan for the future
Once you have found your ideal market and are narrowing down choices, remember to think of what will happen to the home in the future. If you have a younger family, think of how the home will be utilized as your children grow older and schedules get busier.
Additionally, retirees should be conscious of how their decision to buy can impact family members down the road. Extensive planning should be done to determine who will take responsibility of the home if you pass away or become unable to utilize the property.