The steady rise in the number of people living in big cities has more people searching for getaway spots. A vacation is one of the best ways to get away from work with the family. The number of vacation home sales in the United States increased by 29.7% as of 2013, according to a survey.
Buying your own vacation home not only makes getaway easier and more possible, it is also a way to make an investment. You could rent out your vacation home to people around the year and get returns on your investment.
If you are thinking of getting your own vacation home, Sika, experts in Auckland Renovations has put together a list of the most important things to do before buying one.
Invest Quality Time into Choosing the Right Location
Just as you know the things to watch out for while looking for your primary home, you should consider doing the same for this. You should know the kind of home you are looking for and how accessible it is from your primary location. The local economy of the town you are buying the home in, as well as its proximity to social infrastructures, is all necessary information to have. It is also important to know how often tourists visit the area. You are most likely to get constant rental demand if your second home is located somewhere in a popular, sunny town as opposed to if it were in some backwater town that no one ever visits.
Get a Feel of the Place Before Purchasing
The only way to study the town you intend to invest in is by spending time there. According to Forbes, a lot of people who live primarily in cities like to buy houses in rural areas. Consider renting a place to stay for three weeks while you visit the town during different seasons. Try going out to restaurants, bars, movies and the local library just to get to know how well you would fit in. This would give you some insight into the flow of tourists, especially when you visit during different times of the year. You would also know which area of the town is well suited to your lifestyle.
Draw up your Ledgers
Now that you have an idea of how much you would be making, you need to know how much maintenance would cost you. The guarantee that there would be a steady inflow of tourists is one reason why you could well go all in. You would need a realtor to help you estimate how much maintenance could cost you every year. If there’s a high profit margin, then you should go for it. You and your realtor or whoever is in charge of managing the property while you are away should come up with agreement documents. Make an estimate on how much everything would cost you and do a final check on your budget before wrapping up the deal.
Weigh the Pros and Cons:
The introduction of new tax laws in vacation areas might discourage investors in vacation homes, according to research.
Reuters writes that “tax changes that just kicked in will make owning a vacation home more costly and may tank the resale value of the second-home market”.
This simply means that the rental taxes on vacation homes will be more expensive than on primary residences. This may affect you as an investor as you need to consider the effect of those taxes into your income. It would make no sense for you to be in debt just because you bought a property you could have rented.
It is also best to be as candid as one can be with oneself on the issue of how often you can get away. Even when you cannot, will you get demands for rental? You need to do proper research into the flow of tourists, take notes of the busy season/s while bearing your own calendar in mind.
Know What you Stand to Earn
If you are now sure you would get tourists to rent your home even when you are not able to get away, you should do a breakdown of how much your rental income could be before and after you sort out your taxes and maintenance fees. Working with a local realtor will be of immense benefit to you as he/she already has an understanding of the real estate market in the town and knows what to expect.
Investments are made for getting returns and your rental income is the way to get returns from a vacation home. Even if prices vary at different times of the year, they still give you a figure to work with. You should know how soon you might be able to start cashing out on this investment so as to reinvest in other things that you are interested in.
Verify the Property
In a world as digitally advanced as the world we live in today, fraud is commonplace. Just like in every other sector that involves commerce, there is the possibility of being a victim of property fraud. There are many cases of how fraudsters use advanced malware to search for keywords like house, transfer, deposit, payment, etc. in clients’ emails. It is advised to disregard suspicious emails, avoid talking about the deal on public Wi-Fi as they are easily hacked and to always confirm changes in payment accounts with a company before making payment.
You should also do a double check on the deed to the house by verifying with the Lands Registry. Hiring a good realtor is also very important as he/she is familiar with the turf and would also act in your stead while you are away.