Wouldn’t you prefer a specious, relaxing home-away-from-home where you can build new traditions along with equity instead of overpaying for cramped quarters? Of course, the idea of investing in property is nice. But is it really practical?
Here are five things you should consider before buying vacation investment property:
- Is your holding period at least five years?
The real estate market estate ebbs and flows. So you shouldn’t venture in if you want to quickly cash out, especially with vacation property. Since vacation homes are located in resort communities like Lake Arrowhead, California, the market is even more susceptible to market downturns than primary residences located in residential communities. The reasons for this are many. But the bottom line is that people are quick to sell second homes when things get rough.
2. Could you rent the property when you aren’t using it?
Even if you plan to use your vacation home and have absolutely no intention of renting it out, you would be wise to purchase one that has income potential. Homes that can be rented are more generally more valuable than their less desirable counterparts. Also, if the market takes a downturn, renting it out could help you ride out the market until things improve. What’s more; it’s a good idea to have the option of renting to others in case your circumstances change.
3. Would your tax situation benefit from income property?
Since there are significant tax advantages to renting vacation property, make sure you select a home that will give the option of declaring expenses if you decide to rent it out.
4. Will you be able to properly budget carrying costs?
Even if you can handle the mortgage on a second home, make sure you consider additional associated expenses such as taxes, insurance, utilities and maintenance. Also include landscaping, care-taking, exterminating, property management, repairs, periodic exterior painting, etc. To be safe, you should set aside two percent of the home’s value annually for maintenance-related costs. Then, add at least 10 percent for contingencies.
5. Can you afford to buy in the perfect location?
Although you might easily afford something in a less-than-desirable neighborhood, do you really want to vacation where it isn’t safe? Would anyone want to rent from you if the place is located in an area with high-crime? Did you know that more than 80 percent of second-home buyers choose a house within driving distance from their primary residence?
Real estate investing can be tricky—whether you are buying your first home, purchasing a vacation home, or upgrading from a starter. If you are interested in buying or selling property in Lake Arrowhead, California or the surrounding area, don’t get caught in a Catch 22 — owning two homes or none at all. The Prime Team is the only group of real estate agents in the Lake Arrowhead area who stand by our services by offering a number of guaranteed sales and purchasing programs. So don’t miss a prime opportunity to take advantage of today’s market. We’ll answer all of your questions today, and you’re never under any obligation. Call 1-909-337-7653 and ask for a member of the Prime Team.