In May of 2021, real estate website Redfin reported that the number of buyers getting mortgages on second homes skyrocketed 178% over the same time in 2020. More than twice the increase over primary residences, the demand for second homes seems to have followed the coronavirus pandemic as many homebuyers were able to take advantage of work-from-home opportunities. In towns considered “seasonal,” where many of these second homes are, prices have risen 27%. If you’re thinking of buying a vacation home this year, it’s essential to understand a few factors affecting the market and your decision. Here are a few things to consider.
Make a Pros and Cons List
Making a pros and cons list is a tried-and-true method for any significant decision. And the idea isn’t that the cons serve to convince you not to do it but to understand what you’re going into and minimize substantial obstacles. One consideration, for example, is the investment in a vacation home, especially in a desirable area. Or the idea of renting it out while you’re not there.
But the overall cost of maintaining a vacation home is higher, and you will still need to maintain your primary house. You’ll have to pay a mortgage, utilities, property taxes, and everything else twice. And with all of this added expense, will you feel chained to your vacation home and unable to consider other getaways?
Determine your Finances
Once you’ve evaluated all of the pros and cons of buying a second home, your next step should be talking with a mortgage lender. A professional can give you insight into what is feasible with your current finances and whatever you still owe on your primary home.
You will want to consider everything that the house will cost you all year long, not just in the time you spend there. Think about everything that could go wrong in the home, such as frozen pipes, and add in the costs of needing to travel to make repairs or solve big problems.
Consider Renting It Out
Many people choose to buy a vacation home and rent it out. With the popularity of websites like VRBO and Airbnb, it’s easier today than ever before to rent your home out to other vacationers to earn a little extra money when you’re not in town.
However, renting doesn’t always make money. Sometimes it costs money. Despite your best efforts to screen renters, they are not likely to treat your vacation home as if it were their own. There may be costly repairs. And are you okay allowing strangers to use your furniture and accessories?
But renting it out can be a great way to utilize your home when you’re not staying there and can even be fun and exciting. You will need to determine if you want to handle the process independently or work with a property management company.
While it may sound like this is a cautionary tale against buying a vacation home, it’s not. Vacation homes have many benefits, and if it’s something you’ve always dreamed of doing, there are ways to minimize the negatives and truly enjoy your new place.
Do you want to know more about buying a second home?
Maison Atlanta & Co is a full-service real estate company with over 100 years of combined experience buying and selling homes in any market. As a member of Compass, Maison Atlanta and Co has innovation and technology at our fingertips to help our clients meet and exceed their real estate goals and expectations. Call us today.