With summer fast approaching you may be feeling the lure of buying your very own vacation home in the sun. Ideal for escaping the winter blues or getting away from it all at the drop of a hat, vacation homes are certainly a beautiful dream. But can you make it a reality?
It requires careful consideration and planning, but there’s no reason why you can’t purchase property in your desired destination. If it’s something you’ve been thinking about, check out our 5 top tips for buying a vacation home below.
Figure Out Exactly What You Want
When you’re in vacation mode, it’s easy to let your heart rule your mind. However, a vacation home is no small investment and it’s essential that you think long and hard about what you really want and whether you can afford it. Reflect on it for at least 2 or 3 months.
Consider the location; can you really imagine returning to the same place year after year? Is it convenient to get to? It’s worth visiting your dream destination a few times before settling on it. In this way, you can see if you still enjoy being there or if the rose-tinted effect has worn off!
When you’re set on a location, work out what type of home you’re looking for. Do you plan to use it for large family holidays or quiet getaways? Think about which features are most important to you in order to help narrow down your search.
Do the Math
You will need to consider several factors besides the price of the property itself. Take your time and treat the process exactly as you would when buying any other property. Firstly, work out what you can comfortably afford to spend and stick to this figure. It’s all too easy to fall in love with the perfect vacation home, but if you overspend, you may find yourself stressing out more than enjoying it!
Next, consider the additional costs, such as inspections, closing fees, realtor fees, legal costs, etc. After that, sit down and brainstorm the continuing costs you will incur by owning a vacation home, including insurance, taxes, potential community fees, security and maintenance.
Learn the Law of the Land
It’s worth doing some further research into the laws and restrictions that exist in your dream location, especially if you’re planning to buy abroad. Be absolutely certain that foreign investors can legally purchase property and double check to see if there are any restrictions. The local laws may well differ from those back home, so take some time to ensure you will comply with them.
In particular, keep an eye out for taxes that you may be required to pay. If you plan to rent your vacation home out, be sure you are legally able to do so. Some areas have restrictions as to the minimum rental length per year, which can be tricky to negotiate. Finally, be aware of any insurance restrictions. These can be dictated by the property’s proximity to services such as hospitals. In more remote areas, you may struggle to find affordable insurance. A local real estate professional can definitely help you out with all of this information.
Consider Splitting the Bill
If you have friends or family who are also thinking about buying their own place in the sun, think about pooling your funds. This can be tricky to manage, but with strict ground rules in place, it can save each party a lot of money.
If you find willing collaborators, be sure to agree on how much usage you all get, how the payments are split and what to do if one party wants to sell or is using it more than the others. With good communication, this system can benefit everyone involved.
View it as an Investment
When you think about it, you may only use a vacation home for a few weeks a year. In this case, figure out if it’s actually worth the cost—see how many years of renting a similar property it would take to break even on the cost of your own place.
Alternatively, you can utilize your new vacation home while you’re not there and let it pay for itself. Rather than sitting empty for much of the year, why not rent it out? Depending on the location, you may find long term tenants or a number of short term renters—even friends, family or Airbnb users.
Also consider the resale potential when choosing a property. If you don’t intend to pass it on to your children in the future, it’s good practice to seek out homes that will appeal to a wide variety of people who might be looking to buy such a place.
Most importantly, don’t rush into buying a vacation home! Take your time and treat it as any other real estate transaction. Carry out thorough research and hire a real estate professional to help you each step of the way.