Investing in a vacation home is a very important decision, especially for those who travel to specific locations often. It’s a great way to build a foothold into your adopted community for the time that you visit, and to feel more at home than one ever could at a hotel. Of course, there are important things to consider when buying a new vacation home and there are the advantages and disadvantages of building a second home.
Things to consider when building a second home
The first consideration is what to do with the vacation home while you aren’t there. After all, by its very nature, you will only be in your second home for a minority of the year, but you will still need to buy insurance, pay taxes and mortgages on this additional home. Not only that, but elements of the home can fall into disrepair without regular inspections, such as roofs, furnaces and cooling systems. If you don’t keep an eye on your vacation home while you aren’t there, it can suffer damage and not be usable when you actually need it.
A common solution to this is to rent out the home while you aren’t there. This turns your purchase into a true investment, as the vacation home will be earning you money while you aren’t there. You will also have someone who can keep an eye on anything that might need attention, since your tenants will have a pretty good reason to reach out and let you know if something such as the plumbing is out of order. By renting out the home, you will have someone who can keep an eye on things that could go wrong as well as have the opportunity to generate revenue, and have the home pay for itself and more.
The next consideration is whether you will be using the home often enough to justify the purchase. Many people do enjoy visiting certain parts of the country, for various reasons. A common vacation home is one in a University area, so that the owner has a place to stay for football games at their Alma Mater. Other common uses for vacation homes are to visit family in far off parts of the country or to partake in outdoor activity such as skiing, fishing, biking or hiking in places such as Colorado and Montana.
Also think about how often the home will be used, as you might have to manage your renting customers for the periods that you aren’t in the home. Even if the home is paying for itself with a renter, there is still the matter of the investment of time in managing the renter’s concerns. Once certainly can’t leave the renter in the dark if something major has happened to the home.
Of course, there is the opportunity to work with a management company to handle the concerns of your renter. These organizations can help to ensure that your renters pay the bills as well as to perform minor maintenance work that doesn’t require massive investments, such as completely replacing roofing after a heavy storm. These organizations can take the stress away from managing your renters.
Other advantages of owning your own vacation home are tax advantages, convenience, and luxury. Some say they even make a good retirement plan!
Hopefully this will help you to weight the advantages and disadvantages of building a second home. There is certainly a lot of opportunity in having a second home, especially when looking at the additional revenue a renter can bring, but there is also risk that should be considered before making the investment in buying that new vacation home.
Ready to build your second home? Contact us! We specialize in luxury properties in Bozeman, Montana, Colorado and Chicago.