Question: What are the pros and cons of owning a vacation home?
Answer: One of the main considerations in owning a vacation home is how
you intend to use it. Will it be for pleasure or investment? If you
plan to use the home as a recreational property for your personal use,
then consider it a vacation home. If, on the other hand, you are
purchasing the home with the aim of renting it out, it's an investment property.
Another important factor is how much will you use the home? If you
already visit the location several times a year, the answer to this one
is easy. If the location is inconvenient, on the other hand, you may
find that you will rarely use it. A related question is how you'll
handle maintenance, especially emergencies, if the home isn't located
within a few hours' drive.
Something else to consider is can
you afford it? Aside from what it costs to purchase, you'll need to
factor in maintenance costs, management fees, property taxes and many
other costs that accompany homeownership. Maintenance chores may eat up a
big portion of your vacation time, especially if the home sits vacant
for a significant amount of time.
If you rent the house out,
it still may sit vacant during off-peak seasons. That's money lost if
you hope to use the home as an investment.
Because loans for
second homes are considered somewhat risky, they tend to be more
expensive. You may be required to place 30 to 40 percent down on the
home when you purchase it, and if you'll be using the home for income
purposes, you may be paying up to two percentage points higher than on
your primary residence.
There's a lot more to it and I'd be
more than happy to discuss this further with you and answer any
questions you may have. Just give us a call.
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