Have you been dreaming about buying a vacation home
that pays for itself?
Or an investment property that can generate income in
a short-term rental program?
Below are Six Tips or Things to Consider
BEFORE buying a vacation home.
Watch this video for more details or read below:
It’s just common sense that the first thing to
consider is:
Tip #1: Figure
Out Where You Want to Buy
You’ll need to consider where you like to vacation…How
often you plan to go…What is the short-term rental market like in that
area? If you want your investment to pay
for itself or at least cover a good portion of the cost, you’ll want a property
that generates enough income to cover the expenses, including mortgage,
insurance, property taxes, property owners or condo association fees, etc.
Tip #2: Management
You
can manage your vacation property yourself or you can partner with a rental
management company or you can do a combination of both.
If
you are just getting started, it might be a good idea to work with a management
company for at least the first year while you get your feet wet and learn about
the local ordinances, hotel taxes and other considerations.
Using
a management company could net you less income, however, with the expertise and
advertising and other benefits a management company provides, you might end up
generating more income than if you managed your own rentals.
Tip #3: House
vs Condo
Both vacation homes and condominiums can be great
investment properties and they can both provide a good income stream. OR NOT!
The key is finding a property that will appeal to
renters. In Port Aransas, renters love
to cool off in a pool after a day at the beach.
A condominium community with a pool might be more affordable than buying
a home with a private pool. Single
family neighborhoods with a community pool are also another option.
Doing the research and crunching the numbers on the
past history and potential of income generation is a big deal.
Tip #4: Buying
with Cash or Using a Lender
Buying your vacation home through a lender may be a
good option for purchasing if you do not have available cash or if you wish to
leverage your resources.
A qualified lender can give you information on
available programs, which may include using your existing equity in your
primary residence, financing with a loan for second homes or even financing
with a business loan or investment property loan – and there are even more
programs aside from these.
You’ll need to keep in mind that financing a
single-family home is different than financing a condominium. A good rule of thumb is to talk to several
lenders to compare rates and options. And another tip – a local lender or a
lender who frequently loans on property in the area where you wish to purchase
could be a great resource and save you some headaches – especially if you are
buying a condotel.
Tip #5: Fees
Property & Condo Association Fees, Management
Splits, Special Assessments, Insurance Fees and other costs can quickly add up
and eat into your profit. You will want
to find out these details before going under contract on the home of your
dreams. It would be terrible to find out
you are positioned to lose money when you are already under contract!
Each property owners & condo association is
different, so it is very important to do this research while you are starting
your search.
Tip #6:
Pricing & Closing Costs
Working with a Realtor® who is competent in the
location where you wish to buy will help you determine the market price of the
property and help you avoid paying more than you should – as well as help
prevent dealing with the frustration and heartache of offering too little and
losing out on your dream home.
A Realtor®
can also help you negotiate all of the details of your transaction so you know
the amount you will pay at class.
There is a lot of information to consider, but a
vacation home that doubles as an investment property can be as incredible as it
sounds.