Are you considering investing in a home away from home? Vacation home sales remained high in 2015, indicating that many Americans feel drawn to get away. Before deciding on a second property, be sure to ask yourself these questions first.
How will you use it?
Whether it’s a seasonal home, future retirement spot or a vacation home you’ll also rent out, pick a place you love. Some experts say the sweet spot is a destination that’s no more than a three-hour drive from a major metro area. The proximity can help with resale, plus it usually draws a larger pool of potential renters. If rental income is important, ensure local laws or association bylaws allow short-term rentals before making a purchase.
What are all of the costs involved?
The price of a second house goes beyond the initial purchase price. Also factor in property taxes and insurance, potential homeowners or condo association fees, and the cost of utilities and maintenance. Your tax implications will vary, too, depending on how you decide to use the home. If you rent it out for more than 15 days a year, for instance, the IRS requires that you declare the income.
What’s the plan for when you’re gone?
If you live more than a couple of hours away, a local property manager may be helpful for dealing with maintenance issues and overseeing tenants if you choose to rent it out. You’ll also want to take measures to protect your home when no one’s there. A security system is a no-brainer, and it might even reduce insurance costs. Other good bets include motion-sensitive exterior lights, timers for indoor lighting, and a car parked in the drive every so often.