If you’re thinking about purchasing a second home or vacation home that may become your eventual retirement place – here are a few things to keep in mind:
1. Remember the key to vacation homes is location, location, location. This may sound like a cliché, but that doesn’t make it wrong. It is wise to really learn the area by visiting it several times to explore the region and check out the amenities before you make an offer on a home.
Spend time in the area during the “off-peak” season after the crowds return home. Different seasons bring a different environment. Some of the local stores, restaurants and shops may only be open seasonally. You’ll want to be familiar with what the area has to offer during the “off-season.”
2. Assess the property’s true rental potential. Areas with year-round rental potential increase your rental income when you’re not staying in your vacation home.
Be certain, too, that the home you’re considering has the amenities renters expect. Properties that double as vacation rentals should have hot tubs, fireplaces and views to lure tenants. Access to the beach for kayaking or trails for hiking offer year-round options for entertainment. A dock or landing strip will give potential tenants easy access to the property.
Before making an offer check with the local government for permit requirements or tax consequences and, if appropriate, the homeowners association, to be sure short-term rentals are allowed.
Once your offer has been accepted complete your due diligence. Hire a professional inspector to assess the condition of the roof, foundation and other major systems. Major repairs may not only drain your savings, they may also prevent you from renting the property to generate income.
3. Do your math before writing an offer. Add up all the costs for buying and maintaining the vacation home. Mortgage rates are sometimes a bit higher for second homes than primary residences and some lenders may require a larger than normal down payment. Property managers may take a significant bite out of gross income so shop for a manager. If you plan to service the property for yourself, calculate the time you will spend performing such services as booking, cleaning and completing repairs to the property.
4. Don’t let yourself become emotional about the prospect of fulfilling your retirement dream. Sleep on it, maybe even give it a month before making an offer. Emotional desire can cause buyers to rush into making an offer. Just because prices and mortgage rates are low doesn’t mean that you need to rush into a premature decision.
Proceed with caution until you feel confident that the home will not only suit your needs today, but in the future. Another consideration is the age-friendliness of the property. This is especially true if you plan to move into the home when you retire. Years from now it might not be as easy to handle a flight of stairs or maintain an expansive garden.