Have you been dreaming about owning a vacation rental? Possibly owning your own beach house or a cottage by the lake so your family can escape to a relaxing locale each summer? Well, you’ll be happy to know that it’s possible. In fact, you might be closer to purchasing your dream vacation home than you think.
Here’s how to tell if you’re ready to start owning a vacation rental today.
Owning a Vacation Rental: Are You Ready to Purchase a Vacation Home?
Purchasing a vacation home can be quite costly. However, it could possibly be worth it long-term as an investment. If you aren’t sure if you are ready to own your own vacation home, that’s okay. Take a look at some of these ways you could tell if you’re ready to start owning a vacation rental.
Consider How Much You’d Use the Home Before Owning a Vacation Rental
While looking at Newport Beach real estate sounds like a good idea, you need to determine how often you’ll be able to use your beachside abode before making the purchase. Keep in mind, if you can only use the house a week or two out of the year, it doesn’t mean you shouldn’t purchase it. Instead, alter the circumstances to make sure your vacation home is worth the cost.
For example, you could:
- purchase a beachside home that has a garage
- convert the garage into an apartment to use while you’re in town
- rent out the main house to someone who wants to live in the area year-round
In fact, if you find a trustworthy tenant for the main house, you could also use Airbnb or another vacation home rental site to rent out your new cottage when you aren’t there.
If you prefer to have the entire home to yourself when you’re in town, consider renting it in six-month intervals. Or, rent it to other vacationers through a vacation home rental site.
Can You Afford to Purchase a Vacation Home?
Your finances play a huge role in whether or not you should purchase a vacation home. Ideally, you should be able to afford all of your current monthly bills, plus have savings that total between three and six months of your current monthly bills — before you start saving money for your vacation home.
Some other things you need to consider include:
- Can you pay the 20% down payment?
- Have you already set aside the money needed to pay for your kids’ college educations?
- Can you still save enough money to retire if you purchase a second home?
- Is your current home paid off?
- Have you taken the time to calculate the potential return on investment?
- Does purchasing an additional home fit with your long-term financial goals?
Understand Your Added Monthly Expenses
When you start owning a vacation rental, there’s a good chance you’ll have some type of monthly maintenance fees you need to pay to a property management company. These expenses would be for the upkeep of the home.
You should also set aside money for normal home maintenance and repairs. If you can easily handle the added expenses involved with purchasing a vacation home, there’s a good chance you might be ready to buy a vacation home.
Should You Purchase the House Yourself or With Others?
When you’re purchasing one home solely for vacation purposes, it might make financial sense to purchase the house with others — your adult children or close friends. That way, everyone can benefit from the use of the house. Also, everyone shares the added expense. If you purchase the home with your siblings or children, your new vacation home can more easily be passed down through several generations.
Consider Your Exit Strategy
If you purchase a vacation home and decide later that it isn’t really right for you, you need to be able to sell it. So, before you buy a vacation home, you should research the real estate market in the area. If the home is in a part of town that’s not consistently in demand, you might want to consider an option in another area.
Ready for a Vacation Rental?
Ultimately, if you can afford to purchase a beach house or another type of vacation home, why not consider it? If you’re willing to invest your time and money into it, you’ll be adding another asset to your portfolio.
Do you think you’re ready to start owning a vacation rental today?
AUTHOR LaTia Longuemire
My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.