Sometimes you just want to get away. But instead of renting a hotel room or vacation home each time, you want to go a step further and buy a vacation home. There are many benefits to buying a vacation home, including having a comfortable place where you can retreat. There are also some tips you can follow to make sure buying your vacation home is a smooth and beneficial experience.
Take Taxes into Account
Especially in "snowbird" situations where residents live six months out of the year in one state and the other six months in another state, some state governments have instituted a property tax break for these part-time residents. In general, there is not a tax break on a second home, so it is important to consider taxes as part of the cost of owning a second home.
When buying a vacation home, it is important to be flexible. You may fall in love with a property that fits all of your needs but falls outside of your price range. Try to find similar homes in nearby communities priced within your budget. Be willing to give something up on your list of must haves to get a home that you love and can afford. In most cases, you will not live in the second home full-time, so keep this in mind when looking for and buying a home.
Look for Slow-Growth Opportunities
Especially in certain areas of the country, the housing market has been volatile recently. You can find some good bargains if you are buying a property, but it is important to look for buying opportunities that will afford you some profit over a long-term period. Invest wisely. Do not choose a property based solely on price. Take the community and growth of the area into consideration. You have to be willing to take the risk that the property may not increase in value as much or as fast as you anticipate. If you are trying to buy a second home to flip it and turnover a quick profit, it may not be the right time for this type of investment.
Consider the possibility of renting out the home when you are not using it. Certain areas of the country have a stream of tourists that make weekly and monthly rentals a viable option for vacation homeowners. It is important, however, that you do not depend on the rental income to cover the mortgage or other expenses. If the home or condo has an association, be sure to check on the policy for renting it to others. It is also a good idea to talk with your tax advisor on how renting the property out may affect your tax situation.
Don't Let Greed Take Over
Be careful about targeting properties in areas of the country that have seen the biggest drop in prices. For example, the southwestern Florida Coast has seen a drop drop in housing prices, and experts expect further decline. This has created situations where homeowners are now "upside down" on their homes, owing more on the mortgage than the market value of the home. Many investors are rushing into the area and buying these homes for drastically reduced prices.
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