The vacation home offers a private getaway, the perfect weekend escape or summer retreat. Vacation homes are diverse – some nestled in the woods close to a favorite fishing lake and others situated in the heart of a city where recreation and entertainment options are just a block or two away.
According to the National Association of Realtors (NAR), vacation home sales have boomed recently and continue to rise. If thinking about purchasing a vacation home, now may be the time. Consider the following:
Location is Key
Just like with a permanent residence, the location for a vacation home plays an important role in the buying process. Many vacation home buyers select a place located in an area they enjoy visiting frequently. If you plan to use the home most weekends as well as during the summer months, look for a place that’s not a full day’s travel from the primary residence. On average, most vacation homes are about 180 miles from the owner’s primary home. Questions to consider include:
- Does the home have easy access to highways or main roads?
- Is the vacation home close to local shopping, dining, and things to do?
- Are others interested in purchasing real estate in this area?
How Will the Vacation Home Be Used?
The purpose of the vacation home often dictates its location, size, and amenities. If this is to be a home where extended family comes together several times a year, space needs to fit multi-generations and include several sleeping areas plus multiple bathrooms. A weekend vacation home for a couple of people may not need to be as expansive and therefore, would be less expensive. Some vacation homeowners opt to rent out the property when they’re not using it. If also using it as a rental property, it’s common to have enough room to sleep four or six, at least two bathrooms, an updated kitchen, and a large living room or outdoor space for relaxing – but there are no hard and fast “rules”.
Learn the Tax Implications
Expect taxes on a second home to differ from those on a primary residence, especially if you’re buying a vacation home out of state. If you’re renting out the vacation home, you’ll need to make sure you’re paying the appropriate income taxes on any income you receive from renters.
In addition, property taxes on the vacation home may be higher than the primary residence simply because of its location. Resort-style communities and waterfront properties often feature higher property tax than a common residential neighborhood.
Beyond List Price: Additional Costs
Just like a primary residence, a vacation home comes with costs beyond the listing price – so keep this in mind when creating your budget. From a potential mortgage and mortgage insurance to the taxes, utilities, and general maintenance, these costs can and do add up. A vacation home located several hours from your primary residence may need a caretaker or manager, in particular if planning on using it as a part-time rental.
Work with Professional Real Estate Agent
A professional real estate agent has the training and knowledge to make the process of finding and buying the right vacation home less stressful. Work with an agent, discussing your must-haves, wants, and things you’re willing to compromise. An agent knows the neighborhoods and the market. This makes finding the perfect vacation home much easier.