Questions to Ask Before Buying a Vacation Home

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If you’re thinking about buying a second vacation home for vacation or rental purposes, then you’ll need to do some homework before you get serious about shopping. 

Homeownership is a big deal, and buying two homes can either be a path toward long-term income or a mistake that will sink you financially.

Here are the questions you should ask (and answer) before you make any offers.

 

Why do you want a vacation home?

  • I want a rental property for short-term tenants (Airbnb)

  • I’ve always dreamed of owning a home in ________.

  • I visit all the time and want a place to stay.

  • I want to retire here; buying a home seems like a good first step.

 

What can you afford?

  • Second homes usually require at least 20% down

  • Mortgage rates are usually higher

  • Taxes and insurance

  • Utilities

  • Maintenance and upkeep

    • Cleaners

    • Landscaping

    • Property managers

 

Where will you buy?

  • I’ve always known my ideal spot

  • I’m really not sure

    • Spend a week or two in different areas

    • Make a list of pros and cons; compare

    • Ask locals what it’s like

    • Ask other vacation homeowners what it’s like

 

Is this the right home for you?

  • Is the home conveniently located?

    • How far to big attractions and public transportation?

    • What are crime rates like?

  • Does it have a yard? A deck? A garage?

  • How does it stack up against other homes in the area?

  • Will you have to make changes or upgrades? 

    • Can you afford to do that?

  • Will it be rentable?

 

Are there natural hazards or events you need to understand?

  • Earthquakes

  • Mudslides

  • Hurricanes

  • Tornadoes

  • Hail

  • Snow

  • Floods

 

How much time will you spend there?

  • Consider tax laws

  • Factor in to-and-fro travel expenses

 

What’s your exit strategy?

  • I want to retire in the home

  • I need to figure that out

    • After its value has increased by $_______

    • After I’ve owned it ___ years

    • After I’ve paid off ____% of the mortgage