What to look for when purchasing a vacation home

Because a vacation home is not a primary residence, some buyers lower their standards when assessing the property. However, selecting the wrong property can have significant negative consequences.

Here are some tips to help you select the right vacation property.

Will you rent out the property?

The first thing you need to decide is if you plan to rent out your property when you are not using it, or if you want it strictly for your own use. This is important because a property with good rental potential may be different than a property that is perfectly suited to only your needs. In a situation where you want rental income from your vacation home, you may need to compromise on certain features for the sake of appealing to renters.

Is it in your budget?

This is an obvious point to consider, but sometimes—especially when the owner has plans to rent out the property—the temptation to overspend is great. Buyers may justify this by saying they will either make up the difference in rent or that if it ends up they cannot afford it, they will turn around and sell the home. However, there is no guarantee there will be a steady stream of renters, and in some vacation destinations, property values could decline.

Is the property part of a homeowners’ association?

A property may look amazing and offer incredible amenities but be governed by rules that make owning it less than ideal for you. For example, some associations prohibit you from renting out your property, or even allowing friends to stay there without you present. There may be rules regarding parties and occupancy. Some resort properties even demand that the furnishings in the unit be standard.

What are the additional costs?

Once a property is purchased, there are other costs to consider. If the property is part of an association, there will be related fees. Then there are the standard items such as utilities, taxes and insurance. If you are not nearby, you may need to hire someone to assist with maintaining the property. Should the property not come furnished, you need to consider the costs of outfitting the home.

A vacation home can be a great addition to your lifestyle but you should conduct appropriate due diligence before purchasing.