Buying Your First Vacation Home: A Guide For Retirees
Photo credit by Pixabay
Now that you’re retired, you can finally start thinking about that dream home – dream vacation home, that is. Whether it’s in Tahoe or Tuscany, there are a lot of decisions that go into making a good investment. Let’s learn how you can buy a vacation home that pays off.
Before Viewing Properties
Before you pull up that realty website and start looking at properties, there are some decisions you should make now that will impact your costs and future. Here are some questions to ask yourself:
- How much time will I spend in this home? As a primary residence, you can get significant benefits.
- Is this a second home? Zillow states that you will not be able to rent the home if you purchase it this way.
- Is this an investment property?
According to U.S. News, mortgaging your second home as an investment property will make it easier to qualify. If not, you may need far more disposable cash and more hefty investment. Keep in mind, though, that the interest rate on an investment mortgage will be higher than for a residential purchase.
Purchasing an Investment Property
While you will be sure to use this home, considering it an investment property is a smart idea. That means you need to carefully plan where to purchase your home to ensure it’s a magnet for vacationers for years to come. Fortune Builders has a list of the top five hottest vacation rental property markets for the U.S.
Finally, no matter where you are buying your home, Forbes recommends you visit the area at least a few times before investing. That will allow you to have a good idea of the area and local tourism.
The In’s and Out’s of Vacation Home Insurance
Vacation home insurance is not like your standard homeowner’s policy. After all, there is much more liability if you are renting out a home or if it will stand vacant for long periods of time. Southeast Discovery recommends buying insurance from a company that specializes in vacation home insurance rather than from your standard home insurance companies.
One of the reasons is because vacation home policies provide something called “Named Perils” coverage. This special coverage is needed if you purchase your home in an area prone to seasonal damage and/or you will not be there 100 percent of the time. The National Association of Insurance Commissioners states that these policies cover losses of specific events that are stated in your policy, such as theft or an injured houseguest, and can include waterfront property such as boats.
You might also want to buy additional insurance. This article in the New York Times recommends adding the appropriate liability insurance to protect the home’s assets in case of a lawsuit.
Maintaining Your Vacation Property
Finally, vacation properties have one more major difference from residential properties: They need to be maintained even when no one is there. Here are things you must consider to ensure your property is properly cared for year-round:
- This is your number one concern. Safewise recommends installing a monitored security system, securing doors and windows, and getting to know your neighbors since this can reduce break-ins. Consider a security system with a camera that can instantly message your phone.
- Depending on where you end up and what kind of upkeep will be required, you’ll need to find a way to store items like garden tools, a lawn mower, water sports accessories and the like. If your vacation property is lacking for storage space, you can always add a prefab steel shed to protect everything you need and keep it out of sight in the event that you have renters.
- Hiring a property manager – This is your best option for maintenance. Make sure you find a reliable company with a trustworthy staff.
- Will you turn them off or leave them on? If you turn them off, be sure to turn them on again well in advance of your first rental or visit. Additionally, you might want to install a programmable thermostat to make things easier.
Buying a vacation home is a great investment for retirees. Selecting, mortgaging, and maintaining your property wisely can bring you a great return on your investment.
If you don’t live in one of our market area’s, check out My Trusted Agents for a great way to find the right real estate agent anywhere in the country.