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RSS FeedDreaming of owning a vacation home? |
Nov. 7, 2007
Categorized in: Articles by Judy Moses
Have you ever longed to own a home in one of your favorite getaway destinations?
Maybe now is a good time to make your dream a reality. The recent moderation in the real estate market has made prices more affordable, and interest rates are still historically low.
Indeed, more people than ever before are buying second homes or investment properties. However, before you take the plunge, let me give you some suggestions to guide your decisions.
- Consider your hobbies. Do you enjoy skiing? Maybe a mountain resort is for you. Do you prefer boating or swimming? Maybe a home near a lake or the sea would be more appropriate.
- Consider distance. How far are you willing to travel to your second home? An hour? Three hours? Do you want to be able to drive, or are you willing to fly?
- Consider the expense of traveling to the property. This will increase the cost of ownership for you, and may limit your ability or desire to visit regularly.
- How frequently would you like to use the property? Would you like to visit every weekend, monthly, quarterly, or spend an entire season?
- Remember to factor in other costs of ownership: furnishings, maintenance, utilities, taxes and insurance.
- Do you prefer the privacy of a single family residence, the income possibilities of a multi family, or the reduced maintenance of a condominium?
- Be realistic about your current life style and commitments. Will you use the property often enough to benefit from the investment?
- Would you consider renting the property to offset some of the expenses of ownership?
If you would consider renting the property, you may want to explore buying an 'investment' property rather than a second home. Tax codes permit you to spend a certain number of days per year enjoying the property during your 'inspection' of its condition. If the limited personal use is acceptable to you, I suggest you speak with your accountant. There are tax benefits from investment property, such as depreciation expenses, which you can write off against the income received. It may be an excellent way for you to diversify your financial portfolio.
If investment property appeals to you, you need to evaluate whether you will manage the rentals and upkeep yourself or hire a property management firm.
Of course, outsourcing increases your ownership costs and decreases your income.
However, the added peace of mind may far outweigh the expense.
For more information about investment properties, I recommend you read Rich Dad, Poor Dad by Robert Kiyosaki. Mr. Kiyosaki suggests that we cannot accumulate great wealth by work alone. Instead, we must save and make our money work for us. He suggests that investing in real estate is an excellent way to accumulate assets that create a stream of income for us into the future- our mail box money!
Whether it is a vacation or an investment property that intrigues you, a licensed Realtor can help you determine your priorities and evaluate the many opportunities available to you in today's market.
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