4 Things You Need To Know When Buying A Vacation Home
June 28, 2017 | Posted by: Mortgage InGenuity
Everyone looks forward to a vacation, and many people return to their favorite spot each year. If you really enjoy your annual destination, you might be ready to invest in a vacation home. There are many practical reasons to consider purchasing a second home in a popular tourist area, in addition to the fact that it is your favorite places to visit.
Reduces Vacation Costs
The biggest expenses related to a vacation are the daily hotel rate and dining out three meals a day. While some hotels offer a breakfast buffet, you are responsible for your own lunch and dinner. A family of four can easily spend $75 a day on food and $125 for a hotel. Some highly popular tourist areas can cost twice as much. When you have your own property, you can limit your eating out to only the times you prefer. Your monthly mortgage payment eliminates the need for a daily room expense. You are left with more money for traditional vacation activities and shopping.
Rent Your Vacation Home For Extra Income
The months that you are not enjoying your vacation home provide opportunities for extra income that can be applied to paying the mortgage off quickly. It is unlikely that you can rent your property every week you are not there, but you can rent it enough weeks of the year to make a sizable reduction in your loan. The National Association of Realtors says the most desirable rental locations are 'near oceans, lakes or rivers, or at mountain recreation areas.'
Choose An Easily Accessible Location
When your vacation home is only three or four hours from a major city, more vacationers will be interested in renting your property. Accessibility is key for vacation rentals, and having well-marked roads in good repair is essential. While you may be able to rent the cabin that requires an all-terrain vehicle to reach it, there will not be as many people interested in staying there. Renters want to be less than 30 minutes from shopping, food, and entertainment while vacationing.
If you choose to rent your home out, be prepared to submit any rental income on your yearly income tax form. There will be a number of deductions you can take so be sure to keep all receipts.
Having a vacation home is a great way for families to spend less on daily expenses. Generating extra income from renting the property helps pay the mortgage, taxes, and insurance. Someday your vacation home may become your retirement home, and it can be mortgage-free.