With many people wanting to make sure their income is coming from different sources, some people are looking into vacation homes as an investment and future income. While some people are using these vacation homes as a form of investment, others are simply using it for pure vacation or for something to look forward to after retirement. No matter what you are looking into it for, this is an important decision and large purchase! There are a few things to keep in mind when making this decision.
To being with, while this might be incredibly obvious, can you afford a vacation home? If you purchase this home, are you still saving enough money for retirement and other unforeseen emergencies or costs that may occur? (After all, life in 2020 has gone very different than most people could have even imagined.) Have you also looked at your other long-term financial goals and outstanding debts as a whole, as well? If your debt-to-income ratio is high, you may want to rethink purchasing a vacation home.
While you might like vacationing in a certain area, have you really looked into what it’s like to live there full time? And if you decided to ever rent this home out for financial reasons at a later point in time, have you looked into the rental scene? You might not be planning on renting it out now, but you never know what the future holds! Also, if you have not looked into local taxes and other local ordinances, we suggest you do that as well. If you do not like either of those two things, we suggest you think of a different area to purchase a vacation home in.
If it is the height of tourist season where this home is, we suggest you wait to purchase the home at a different time. This is for a few different reasons. First off, not as many homes will likely be available at this time due to the current owners wanting to make as much money as they can during busy season. If any repairs need to be done on the home, you will have plenty of time to do it in the slow season.
Whatever you plan to do, we want you to make sure you look into every avenue of it. Especially – what is the real reason you are wanting to purchase a vacation home?