Thinking About Buying a Vacation Home For Income Potential?
Here are Four tips to help you make the right choice:
• Make Sure It’s Rentable…
Whether you’re interested in renting your place out or not, it’s a good idea to buy with renting in mind–after all, a vacation property’s rental potential will certainly affect its resale value. You’ll want to ensure local ordinances allow for short term rentals, and that your property is in a location (and condition) that’s attractive to renters.
• But Don’t Rely On Rental Income…
While renting can be a great source of income, it’s rare for rental revenues to cover all the costs of owning and operating your vacation home. Additionally, to benefit from tax deductions associated with renting, you’ll only be able to occupy your vacation home for two weeks or 10 percent of the rental days, whichever is greater. If that doesn’t sound realistic, you’ll have to include those costs in your thinking as well.
• Be Realistic About Price…
Remember that a vacation home is icing on the cake, not the cake itself. Remember, too, , banks are imposing stricter requirements on loan applicants for second homes. Before you commit to a big, golf course home, be sure you have enough cash flow to cover your new mortgage, in addition to all of the other costs .
• Do Hands-On Research…
It’s obvious you should not buy a vacation home sight unseen. But more than that, you should not buy a vacation home unless you absolutely love the area. Since a vacation home is a long term investment, and since you’ll still own (and pay for) your vacation property in the off season, it’s important to get a full experience of the surrounding community before you commit.