Like many of those in Real Estate, the Federal Reserve’s intent to keep rates around their current level is good news. If you have been on the fence regarding a vacation home, investment property or a refinance there’s no time like the present.
If you’re like our family, taking a trip to anywhere seems to add up quickly. When looking at the price of taking a family on a vacation – even down to Sea World in San Antonio – things can start to get pricey. If you are considering someplace more high-end (e.g., Disney, Hawaii) you probably feel like you have to dip into your children’s college savings. But what if you could have both? A place to vacation that could offer a return on your investment in fifteen years when you need the money for college? A second home can offer you the opportunity to let your family experience what’s it like to have a home away from home – and be a good investment. The “good investment” part of the equation is critical!
Location, Location, Location!
If you’ve purchased Real Estate before, you’ve heard this mantra. Location is one thing that will never change about a property so it’s important to choose wisely. If you haven’t spent considerable time in an area, I highly recommend renting there first. Trying several locations near/in the location you want and (ideally) during the times of year you plan to be there can help paint a realistic picture.
Do the numbers work?
If you plan on using this home exclusively for your use (i.e., not renting the home) getting to this answer is somewhat easier than if you are looking at it as a rental property. Here’s a place to start:
1. Look at the annual cost of ownership (e.g., mortgage payment, maintenance, improvements) over the time period you plan to keep the property
2. Take the annual cost of ownership and ballpark how much you’d make if you invested it in a college fund or in the market
3. Taking into account how much the property will appreciate during the time period you plan to keep it, estimate how much the property will be worth when you’re ready to sell
After comparing the return on investment (ROI) between the two options (buying vacation home vs. investing elsewhere), you’ll be in a better position to understand the trade-offs and consider what’s best for your family.
Memories are Priceless
No matter how you want to slice it, the memories you make with your family last a lifetime. Buying a vacation home gives you a gathering place you can spend with those who matter most while building equity. Whether it’s roasting marshmallows by your cabin in Colorado or watching children make sand castles in North Carolina-you’ll never regret helping to create those memories.
Do you want to learn more about purchasing a vacation home? Give me a call or email me to learn more.
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