5 Tips For Buying A Vacation Home
My family and I just returned from a mini-trip to the Lake Chelan-Manson area last night. We had a great time - the smoke had cleared, we had one really clear and warm day on the lake, and the change of scenery was good for my soul. We talked a bit about a longtime dream we've had of finding a plot of land we love and building or updating an existing home and making it a sort of legacy family vacation spot. Somewhere with hot summers and snowy winters that was no more than 4 hours away from the Seattle area. This prompted me to prepare a few ideas and tips for anyone else out there considering a second home.
Here are my 5 tips when considering the purchase of a vacation home >>
1. Rent first.
I strongly suggest that you rent more than once in the area you're considering purchasing a vacation home in before you buy. Consider staying for a good chunk of time - maybe two weeks - to get the feel for life in that spot. Try visiting at different times of year to get to know the weather, the crowd patterns, the activities, etc. I even suggest visiting a similar location to compare and contrast. For us, we loved Lake Chelan, but we're going to plan a stay in the Hood River area next to see how we like it there before we start zeroing in our preferred location.
2. Consider how often you'll use it and weigh the cost options.
My wife and I have discussed how easy it would be to pick-up and head off to a vacation home some three or so hours away at this stage in our family's growth - our daughters are 1 and 4 right now. But what happens when they start school and have their own weekend plans? We are interested in having a spot that is passed down generation to generation, so we're investigating what options there would be for teaming up with a family member of ours to share in the responsibilities associated with having this second home, but also another growing family who can enjoy the space on their own schedule as well. That plan comes with its own risk and considerations, of course. For those who don't think they'd use is second home enough to balance out the costs, AirBNB or VRBO homes are a great option and many home owners in those spaces are happy to find regular renters.
3. Understand the tax implications.
Talk with a tax professional and run scenarios so you're fully aware of all costs associated with owning a second home in the area of your choosing before you buy because it's not safe to assume it'll be the same as your primary residence. For instance, those who rent out their second home will need to pay income tax on the rental income, and property taxes can vary from location to location.
4. Really consider all the costs.
I definitely suggest buying under your budget knowing you can add or improve things over time. When you acquire a second property, this means you have two mortgages, two sets of all appliances to maintain (or repair!), two sets of neighbors, etc. The costs doubles, so it's good to keep lots of room in your budget. I would even go as far as to say that if you're buying a vacation home, consider it more of a recreational spend as opposed to an investment as there are quite a few costs associated - as your property accrues value over time, it'll just be a perk! I pulled this excerpt from Money.com as I felt it was an excellent piece of information when it comes to cost planning with a second home:
“Presume repairs will cost about 1.5% of the value of the house. So for a $100,000 place budget for at least $1500 a year in repairs. Each year the tab might be higher or lower than the estimate, but this rule of thumb will give you some flexibility from year to year.”
5. Once you're ready, find a real estate agent in the area you most desire. This is important.
A qualified real estate agent should be able to provide details about taxes in the area, and possibly even tips on ways to save, such as buying just outside the city limits or up and coming areas. I can help connect you with realtors in various areas - please just be in touch.