You’ve saved diligently, researched your favorite areas, discussed the purchase with your family, and even daydreamed about decorating schemes. You may feel more than ready, but there are some important considerations to make before moving forward. Let’s review five steps you can take to help ensure buying your vacation home is a smooth, easy, and rewarding process.
Think about the pros and cons
First, you’ll want to make a list of the pros and cons of purchasing a vacation home. Sure, you’ll have a place that’s yours to get away to during any time of the year, freedom to come and go as you please, a new location to explore and enjoy, and maybe even an investment property that can increase in value over time. However, with another house comes additional maintenance and repairs, which can incur unexpected costs and financial setbacks. Write out your list of pros and cons and make sure that they balance each other out, and that you’re prepared to deal with any of the natural pitfalls that come with owning another home.
Consider how much you’ll use it
You’ll also want to seriously consider how much you’ll be able to use your vacation home. Do you have a flexible work schedule? Kids in school? A partner who can’t get away as often as they’d like? Be realistic about the amount of time you’ll be able to spend enjoying your vacation home, and how you might be able to put it to use when you’re not occupying it.
Decide whether you’ll rent it out
Renting out a vacation home can be a great source of passive income or an easy way to help supplement its cost. However, renting out a property is not for everyone. Before you purchase your vacation home, think about whether you’ll rent it out. If the answer is yes, decide on some initial parameters. For example, maybe you’ll rent it out only during certain months, or only to family and friends. It might also be helpful to crunch some numbers while making your decision.
Find a trusted agent
An important step before buying your vacation home is to find a trusted agent who can work with you and your family to find the property that suits all—or most—of your wants and needs. Be clear about what you’re willing to compromise on. You should feel comfortable communicating exactly what you’re looking for and collaborating with your agent to find the home that’s right for you.
Think about purchase protection
Finally, it never hurts to begin thinking about purchase protection. Consider life insurance—potentially a permanent life insurance policy like whole life insurance, which includes a cash value component that you can borrow against for any reason, including home repairs. The death benefit from a life insurance policy can help ensure that your dependents will continue to be able to pay the mortgage even if you pass away unexpectedly.