Four Keys to Buying a Vacation Home

Four Keys to Buying a Vacation Home

With the freedom of retirement, travel and vacationing become much easier. With the ability to enjoy longer trips comes a quandary. To buy a vacation home in your chosen area, or to continue renting for extended periods of time?

How to Know if You’re Ready

Invariably, owning a vacation home is going to take more time and money than you anticipate. If you decide to rent the property out when you are not using it, you will have to have it cleaned between guests. There is also the maintenance to consider. Also, it may not be best to buy a home outright. You don’t want to spend all your disposable cash on a home and then have nothing left to enjoy.

It is better to have a mortgage rather than spend all of your cash on a home so you have money to spend on taking advantage of your retirement. You may have to dress the space up, which is another expense. You can save some money by focusing on furniture rather than decor because renters are more concerned with comfort and functionality than artwork and knick-knacks. Consider getting beds with storage units underneath so you don’t have to buy a chest of drawers for every room; a dining table with a removable leaf insert that can be expanded for multiple guests; and a chaise sofa sectional, which works well in any shape of living room, comes in endless styles (and accommodates all kinds of budgets), and can function as both a spacious living room couch and an extra sleeping space for overnight guests.

Still, the nicer the home, the more you can charge for its rental. If you have sizeable savings, and you have more than enough time to thoroughly make use of the vacation home, it can be a great way to spend your travel rather than springing for a hotel or renting a vacation home yourself.

Retirement Home in Florida

Retirement Home in Florida

How to Pick a Location

This largely comes down to what you are looking for. If you will not be renting the property, you are free to pick the location of your choice. Do consider proximity to attractions of interest, and possible friends or family. It’s also wise to look at the surrounding area. If you want to vacation in Yucatan, Mexico, it may be more viable to buy a property just off the beach, but in an area close enough to visit it, like Merida. However, if you plan on renting out the property, there is much to think of. You will want to consider somewhere that has tourism year-round, so you don’t have a vacant property for months on end.

If that is not possible, then figure out when the tourism season takes place, and how much profit you would make. From there, see if that would cover expenses in the slower months.

How to Maintain the Home

This may be your most difficult aspect of owning a vacation home. If it is not within easy driving distance, maintenance will become a chore best managed by someone else. You might hire a property management company to handle the home. They will clean and make repairs as they arise but might be more expensive than you are looking for.

Also, if you are renting the property out, they will handle the distribution of keys, and cleaning between guests. If you’re on friendly terms, you could ask a neighbor to keep an eye out or pay them to check in on the home every couple of weeks. Of course, you could also hire a housekeeper or cleaning company to stop by monthly and tidy up the home. There is also the option of having a local handyman stop by at set intervals to perform touch-ups on your property.

How to Keep Insurance Low

When owning multiple properties, you will want to do everything to save money. Part of that includes keeping home insurance rates low. You can bundle your auto insurance to see some savings, but don’t discount looking at multiple providers to find the best rate. Raising your deductible is a good means of paying less monthly, as is making sure that you are not over-insured. Your insurance company may offer discounts if your home meets certain requirements, including if it’s disaster-resistant or up to date with its smoke and carbon monoxide detectors.

If you’re already familiar with the buying process, there is no mystery to making a purchase. There are many options available for maintenance of a long-distance property, so don’t let that worry you. If you have the proper savings and a stable income, this can be a beautiful new chapter of your life just waiting to be explored.

Article Compliments of Jim McKinley @ jmckinley@moneywithjim.org

 

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