Owning a vacation home remains a dream for many people. A vacation home becomes a part-time residence allowing the owner to escape from “regular life” for a few months of the year. Situated in a desirable location, a vacation home becomes the perfect getaway. Whether located in the mountains, the seashore, or elsewhere, the second home delivers a perfect and accessible means to recharge from the proverbial daily grind. And, of course, a vacation home serves as an investment property as well. The value of the home may increase quite a bit adding to the net worth of the owner.
All these positive aspects should not cloud some basic common sense and good judgment, though. Rushing into buying a vacation home could lead to a disastrous outcome. Rather than being too quick to make a purchase, the would-be vacation homeowner should take some time out and ask six very critical questions.
1- Can I really afford this property?
Being overwhelmed with the positives of a vacation property might need some to become overly optimistic about the cost. Along with the many benefits, scores of expenses come with owning a home. In addition to paying for the mortgage and insurance, upkeep, repairs and other expenditures coming to play. The inability to afford the property could destroy personal finances. In worst-case scenarios, The buyer might end up in foreclosure. So, be sure you can really afford the home or else the second property may turn into a financial nightmare.
2- When was the roof installed?
A critical error buyers make with vacation homes involves not being as diligent about upkeep and repair as with a primary home. This leads to overlooking such things as inquiring about the condition of the roof. A dilapidated roof may need to be replaced without delay. The cost of a replacement could run upwards of $10,000 or more depending on the property. Leaky roofs surely could cause damage and add other expenses. Performing a roof and other inspections on the home prior to buying makes sense for those hoping to avoid surprise repair bills.
3- What direction are the other property values headed?
Vacation homes can yield a nice return on investment, but the potential does exist for properties to lose value as well. In vacation areas, home values may decline due to a number of factors. Seaside regions that have been hit by hurricanes and other weather events might be experiencing lowered property values and an oversaturation of properties for sale on the market. If values are trending down, now may not be the right time to buy.
4- Would anything stand in the way of renting the property?
One way to cut down on costs associated with a vacation home would be to rent it out.
Renting a single room or even the entire house for the summer could allow much-needed cash to flow into a new owner’s coffers. Don’t make any assumptions about free reign on rental options, though. Local rules and ordinances may be a hindrance to someone hoping to earn rental income from a vacation home. Are there zoning restrictions in place? Has the township curtailed the ability to rent through Airbnb or other services? Anyone relying on rental income to make the property affordable should make sure no obstacles exist.
5- Does the location accommodate any health issues?
Persons with health conditions may require convenient access to a hospital or other medical facility. A vacation home that is too far from potentially necessary medical care may present tremendous risks to the person living in the home. No matter how nice the home may be, nothing would be worth risking anyone’s health. Buying a different property in a location more beneficial to the occupant’s could avoid a lot of problems.
6- How much will insurance cost?
Insurance rates can be quite high depending on the type of property and the area it is located. A region known for harsh weather likely comes with both a limited number of available insurance providers and high premiums. Insurers may even require post-underwriting inspection repairs in order to approve coverage. Be sure all this is understood prior to purchasing a property. Procuring the best possible insurance policy becomes necessary to protect the investment.
The Right Questions
Overall, asking the right questions helps keep a buyer on the right path. That’s really the only path to be on.