Investing in a Vacation Home
When you make the decision to invest in a vacation home it can be a positive financial asset. You will have the ability to visit the home when you wish to go on vacation and rent the space out while you are away. However, as with any investment, there is also a degree of risk. Understanding what to expect from a vacation home investment is essential prior to making the actual decision. Follow these steps to ensure you make a successful investment:
- Have the funds up front. While it is possible to receive financing for a second home, without excellent credit and assets it may not be a possibility. If this is the case you can use any cash or savings you have, as well as find investors for the property. In many cases, people use family and friends who may wish to utilize the property as well.
- Visit the location where you are considering purchasing a vacation home. Not only do you want a desirable area for yourself, but potential renters as well. Ensure the location you are considering is near things such as airports, major towns or attractions, water or other areas of interest a vacationer may have. Also, spending a substantial amount of time in the area can help you determine if it is an appropriate vacation destination.
- Crunch the numbers. You need to carefully determine how much money the property will cost compared to how much you can make off of it. Talk with other homeowners, landlords and neighbors in the area to help determine a fair rent price for the home. Also, keep in mind maintenance costs while you are away, taxes and mortgage payments. Many times vacation homes have “off-seasons” as well. In cases such as these you have to ensure that the profits from the other months will be able to make the investment a wise one.
- If you live far from the property you will have to set up a property manager. This will be a person who will be responsible for the property while you are away. This is an additional expense you should ensure you include in your budget.
When considering investing in a vacation home the biggest piece of advice to follow is to not get in over your head. Purchase only one property at a time and let it become profitable prior to purchasing another. Taking it slow can ensure a smart decision that will benefit you in more than one way. For example, you will have a vacation spot to visit whenever you would like, as well as a property that can make you money. Use the tips and guidelines above to ensure you make a wise investment. Consider an investment in a great home in Pasadena. You can find great Pasadena homes for sale when you meet with a qualified real estate agent.