Buying a Vacation Home? 5 Questions to Consider First.

If you and your family would like to call your favorite destination “home,” you may be considering purchasing a vacation property. This can be an exciting milestone, but there are a few things to consider first. Your financial professional might be able to provide you with some resources to help answer some of these critical questions.

1. How Will I Use the Home?

Think about how often the home will be used – and by who. Will you be renting it out? Can family come and stay when you’re not there? Or will it only be occupied a few weeks a year?

Did you know? 600,000 Americans use online marketplaces to rent out their property to vacationers. (1)

2. Am I Rushing This Decision?

When are you making the decision to buy a second home? Is it right after a relaxing vacation at a new location? Or have you been considering this for a while? A second home is a large expense, you’ll want to avoid being impulsive when making your decision.

Tip: Travel to your desired location during each season to get a better feel for what it’s like all year round.

3. Have I Calculated the Costs?

Aside from the cost of the house, you’ll need to prepare to pay the ongoing costs of owning a second home. These include:

• Insurance
• Property Tax
• Maintenance
• Property Manager (if renting)
• HOA or Amenity Fees (if any)

4. Are There Rules About Renting?

If you plan on renting out your vacation home, check local laws and guidelines. Some places cap the number of days a home can rented out or provide further restrictions on renting to vacationers.

5. What Will I Do in an Emergency?

In some instances, an emergency might be a broken water heater or an electrical problem. In other instances, it may be more severe. What’s your plan? Would your home be within driving distance, or will you hire someone to check it out periodically throughout the year?

Did you know? On average, the US is hit by 6 to 7 hurricanes a year. (2)