Most of us think of retirement as a time to slow down, but it’s also a time that’s full of opportunity. Buying a vacation home is one of those opportunities that can have some amazing advantages, from giving you a place to enjoy your leisure time to serving as a smart investment. As exciting as this opportunity is, buying a second home is also a major decision. To help you with the process, Mountain Realty Group has put together some important factors for you to consider.
Hone in on Location
You may have just started thinking about a vacation home, or you may have had your heart set on a certain spot for years. Either way, location is the name of the game. Once you know the general area where you want to buy, be sure to consider a few other key details.
- How close do you want to be to friends and family?
- How close is it to your current home? Is it easy to get to?
- Is it in an accessible community?
- If you plan on renting the property, is it a prime location for rentals? You’ll want to choose a property that’s situated near top tourist spots in the area. Turnkey highlights several attractions in Sevierville, including Boyds Creek and Forbidden Caverns.
If you only plan on staying at your vacation home for part of the year, you can earn passive income by renting it at other times. Besides location, there are a few other things you should consider to make the most of your investment.
- Look for a vacation home that won’t require a lot of maintenance. A low-maintenance home will save you lots of headaches, and it keeps your costs down because you can avoid expensive repairs.
- Fit Small Business recommends finding out average vacancy rates in the area where you’re buying and comparing that number to your anticipated expenses. Don’t forget to factor in expenses like taxes, homeowners insurance, and HOA dues. If you aren’t retired, when you’re thinking about how costs fit with your overall budget, it’s important to set your budget based on your future income rather than your current income.
Other Financial and Logistic Considerations
Most retirees live on a fixed income, and buying a vacation home will play a major part in your financial future. This is why it’s so important to check off each of these financial considerations before signing any deal:
- Insurance costs – Having insurance is a necessity that comes along with owning any home, but you can keep costs down by thinking about it in the planning stages. The Insurance Information Institute recommends buying in an area where there is less risk, like storm surge in beach locations. You can also save by bundling multiple insurance policies together and by shopping around.
- Maintenance – Even if you buy a newer home that will require less maintenance, every home needs to be maintained in order to keep it in good condition. Do you plan on maintaining the home yourself, or will you need to hire a company that can help?
- Accessibility features – You want your vacation home to be a place where you can enjoy throughout retirement, which means it’s a good idea to look for accessibility. Think about whether you want single level living, as well as a wide entry, and accessible bathrooms.
- Tax implications – The type of tax deductions you can claim on your vacation property will depend largely on whether you also rent it, as well as how much the home is kept for personal use. Keep in mind that while the federal tax law applies nationwide, there may also be local and state tax regulations that apply.
- Plan for a rainy day – Every homeowner should have an emergency fund. When you buy a second home, your rainy day fund needs to grow so that you don’t get any surprises you aren’t prepared to handle.
Some surprises can be fun, but you certainly don’t want an unwelcome financial surprise! This is why you don’t want to overlook any of these crucial factors before buying your home. The vacation home of your dreams is out there — let Mountain Realty Group help you find the perfect place where your dreams meet reality.
Image via Pixabay Guest blog by Jim McKinley