Dreaming of Owning a Vacation House?
Have you ever dreamed of owning a bungalow near a lake, a cottage along the beach or a cabin in the mountains? Does having your own special place to slip away to for a weekend (or weeks at a time) appeal to you?
Of course it does! Almost everyone fantasizes about owning a special vacation hideaway. The good news is you don't have to be wealthy to do it.
With good planning, your dream may not be as far off as you think.
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Examine the costs. Look at the price of the place and don’t
forget financing fees, down payment, additional monthly mortgage
payments, real estate tax, utility bills and maintenance
expenses.
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Compare prices. Look at what you pay to get away now – hotel or
rental fees, eating in restaurants, travel and additional expenses for
weekend getaways and annual family vacations – and match those against
the savings you may realize from owning your own vacation property.
Where do you come out ahead?
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Discuss the pros and cons. Do you want a single-family home,
condo or a time-share property? Each option has its own distinct
advantages and disadvantages.
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Look at your financial situation. With the help of an investment
professional, you can develop a financial plan that will lead you
toward owning a vacation home.
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Explore the tax consequences. Owning a vacation home and how you
use it (as a personal residence or rental, for example) may impact your
tax situation. Talk with a tax advisor to find out the tax implications
of your plan.
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Think about the location. What do you want? Access to water
sports, snow skiing or hiking? Do you want the peace and quiet of an
isolated area? Do you want to be close to amenities? If your vacation
property is likely to become your retirement home, think carefully
about being close to quality medical care and other important services.
When choosing a location, consider the strength of the local economy,
the tax rate and the convenience of accessing it from your primary
residence.
- Explore the area. If you decide that purchasing a second home is financially feasible and you've narrowed down your location options, visit the location often and talk to residents. Ask questions until you have a full understanding of what the community is like, including the amount of activity it enjoys, its conveniences and its safety record.
Making your dream come true starts by carefully reviewing your finances, developing a financial plan and understanding what you want from your vacation home. Hopefully, your efforts will pay off in years of enjoyment and wonderful memories for you and your family.
