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Considerations of Purchasing a Vacation Home

Are you dreaming of a home on the beach? Or maybe in the mountains close to skiing and hiking? A place of your own where you can get away from the hustle and bustle of your daily life? It may sound like a dream, but before you leap into purchasing a vacation home, make sure you know what you’re getting into.

It’s important to be honest with yourself about why you want to purchase a second home. The way in which you view the property can have a significant impact on the type of home you purchase, its location and the expenses associated with maintaining it. Do you view the home as an investment property or a lifestyle asset?

Investment Property

Real estate investors typically take one of two approaches to making money from a property.

  1. Renting the home – If you plan on making your vacation home available for rent, it’s important to be aware of the following.
    • Renters can be expensive. Many owners who accept short-term renters are shocked at how much damage can occur in a short period of time. Renters will not show the same care and respect for your home as you do. If you choose to rent, be prepared for additional costs related to property maintenance and the replacement of missing or damaged items.
    • Rental income isn’t guaranteed. There are many factors that go into how often and for how much you will be able to rent your property. If you’re dependent on a steady stream of rental income to cover expenses, you may find yourself in a tough situation. It’s best if you can cover the mortgage, maintenance, taxes and other expenses on your own and using any rental income as a supplement.
    • Renting takes time. There is a significant time commitment involved with listing, renting, and collecting fees on a rental property. Plus, maintenance issues have a way of