5 Things to Consider Before Buying a Vacation Home

5 Things to Consider Before Buying a Vacation Home

Finding accommodation for your next summer vacation consists of rifling through brochures and websites for the best resort or hotel in your location of choice. Those who tend to vacation in the same place are also probably noticing that the prices of hotels and vacation rentals are increasing yearly. With all things considered, why spend a dime more on renting out vacation spaces if you do not have equity?

Purchasing a vacation home allows you to have a consistent, fun place to gather your loved ones and enjoy the warmer weather or snow-filled holidays while retaining an investment that tends to increase in value over time. Before scouring the internet for new properties in Massachusetts, here are five things you should consider before purchasing your vacation home.

Consider the pros and cons

It is no secret that buying a home is a huge responsibility. Having the means and time to create a secondary space to relax in requires some unrelaxing effort. The downside to purchasing a vacation home is that the down payment for a secondary property tends to be higher, and a home you are not frequently in can garner unexpected, emergency expenses. If you live far away from your vacation home, traveling to and from the property to inspect the condition and initiate necessary repairs can be a burden.

Even with the less fun aspects considered, having your own vacation home can provide many benefits. The biggest plus to having this space is knowing you always have somewhere to escape when you need a break. You have 24/7 access to the property and can design it just how you like instead of renting out a property you have little to no control over.

It is also a great investment opportunity, as homes in prime vacation spots throughout Massachusetts continue to skyrocket in value throughout the years. You can also rent the property out when not in use, which is a great form of passive income. During the summer, when festivals and concerts are plentiful, vacationers will look for a place close to the action and pay a premium for a great property.

Determine your budget

The budget is a crucial aspect of preparing to purchase your secondary home. How much are you willing to spend on the down payment and total mortgage? Can you afford property taxes, utilities, and HOA fees? You should also consider how mortgaging another home can affect your financial future and if you plan to use the property as another source of income.

Having your vacation home as an income source forces you to pay additional taxes on the property, which can quickly add up if you do not properly research the best rental price for the property. Thankfully, owning a vacation home can offer tax breaks for those who rent out the space for 14 days or less per year, so you can pocket a nice profit without having to dish any out for taxes.

Find a location that fits your needs

Location deserves prime consideration, and settling on one can help make other decisions in the homebuying process run a lot smoother. Think about why you want to buy a vacation home. Maybe you live in Boston and would like to escape the city life for something quieter; perhaps you’re looking to escape the humdrum of small-town living and need a location that offers a bit more excitement. This will narrow down the best places to buy a vacation home.

Also, think about the ways you will use the home. Do you plan on inviting the whole family over for a long weekend full of outdoor activities? Then a Winchester home with lots of backyard space that is far away from your neighbors may be perfect for you. Are you more concerned with being able to access your boat without straying too far from the property? A Manchester estate right by the water could be the answer. Either way, pay close attention to what you actually want out of the experience and tailor your location to those requirements.

Are the market conditions favorable for purchasing a vacation home?

Right now, the interest rate for a 30-year fixed mortgage is 6.71%. Though many experts claim that interest rates are projected to decrease toward the end of 2023, rates have generally fluctuated between 6.27% and 6.70% since December 2022. This has caused current property owners to delay putting their homes on the market as they do not want to purchase a new home at the current rate.

Though this might make you nervous about purchasing a property, have no fear. Despite the commotion, rates are pretty regular at the moment and are not projected to spike dramatically in the coming months. With that said, market inventory has been on the lower side for the past couple of years, and if you wait too long, you may miss out on securing the best property for your needs and expectations. There is truly no better time than now to begin searching for your vacation home, and with the right real estate agent, you can score the deal of a lifetime on the property of your choice.

Review options for rental income

Using your vacation home as a rental income opportunity can yield a tidy annual profit. Homes with gorgeous, scenic views that are close to local shops and busy venues will attract tons of vacationers who are looking for a well-cared-for, comfortable space to stay in temporarily.

Though you will have to pay certain taxes if you rent out the property and use it personally for more than two weeks out of the year, you can receive tax deductions on home expenses like supplies, insurance, and repairs, as they are necessary to conduct business. Renting is a great way to lessen the personal cost of homeownership, as long as it is permissible by local laws and your property’s HOA.

Find your next real estate escape

Buying a vacation home allows you to get away from the stress and responsibilities of daily life. Kim Covino knows how to navigate the Boston real estate market and beyond to find you a vacation home you’re excited to return to year after year. Explore what Kim Covino & Co. can offer you as you consider investing in your next Massachusetts home.

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