Summer calls for cool drinks poolside, naps on the beach, jet-skiing on a lake, or even hiking under the stars in the mountains. We’re offering tips in honor of these longings; tips to consider when looking into purchasing a vacation home.
Always primarily consider location (obviously) when looking into buying a vacation home. Aside from location likely being the first thing on your mind, there are numerous reasons as to why location is important. How will that location hold up in the years to come, will renting it out in off seasons be an option and lastly, will you still be able to enjoy your home during the busiest tourist seasons of the year? Each of these are important factors to consider as to how they impact you economically and also how they impact how you will be able to enjoy the home.
It is advised to always think conservatively when it comes to expenses. Set aside 1.5% of your property’s initial price for unexpected expenses if you are planning on renting out your home. Be sure not to assume that you will always be able to rent out your home to tourists when you are not there, as this could impact the economic gain you expect to have.
Lastly (and likely the most important tip), it is always advised to rent in the area that you are considering buying in for a minimum of two weeks. You want to get a feel for what it is like to stay there for extended periods of time. All of these may seem a bit overwhelming when considering buying a vacation home, but there are significant economic benefits to owning a second home. One of these being that the interest gained on the mortgage of a second home is tax deductible.
A second home is a big investment. Depending on where you’re considering buying, it can also be costly. Taking out a mortgage makes that investment much more doable, while the income you gain from renting it out could likely even cover the cost of your mortgage with a little left over. Feeling out a rental home can only be done through experience- so get renting and go enjoy that pool/beach/mountain! Speak to your 8z Mortgage advisor today for help.