You’re in a fortunate position where you have the money, and time, to purchase and use a vacation home. It’s your goal to buy a home that increases your net worth along with becoming a source of income. You want to rent it out when you’re not there, so you can have an additional income.
Buying a vacation home that will do everything you want it to do isn’t as simple as purchasing something you like, though. There are several things to consider before you make a decision. Here are four tips to help.
1. Know what location you want
The first thing you need to think about is what kind of location you desire. Do you love Colorado and want to be in the mountains? Do you prefer living near a lake or river? Are you big on tourist spots? Choose a location that’s a good fit for what you want out of the home. Then, consider how the location affects your ability to rent the property. You should buy something that would be in demand and still gives you an opportunity to get everything you want when you visit.
2. Learn about the taxes at the home
Taxes make a difference when it comes to your home-buying options. Remember that a second home is not taxed in the same way as a residential property.
3. Consider the potential rental income from your property
You’ll also want to consider the potential rental income you could receive from your property. You can base your rental assumption on the rents others charge in the area. Always err on the lower side of rental income, so you’re not caught off-guard if your property doesn’t bring in as much as expected.
4. Rent before you buy, if you can
Sometimes, homes are up for rent before they’re up for sale. Stay in a home in the area where you’re looking to buy if the home you want isn’t rented out. You should stay for a few weeks and make sure you like the area and enjoy yourself with the local activities. It’s best if you visit the location several times in different seasons, unless the area doesn’t really have differences between seasons. It’s in your best interests to know what the tourism scene is like and how the weather affects the property year round.
Buying a rental property can be a great source of income and, it can become a place you love to visit. Remember to look into tax implications and other issues before you buy.