Vacation homes are something that many Americans either have or intend to purchase in the future. Many choose to buy vacation homes near the beach, or in the mountains. If you vacation in one area frequently, having a vacation home can be a nice luxury; in fact, around 12 percent of all homes sold in 2016 were vacation homes. While vacation homes can be very attractive, there are a few things that you should consider before making an investment in this type of property.
The first thing that you should consider when it comes to a vacation home is the overall cost. The average price of a vacation home is $200,000, with 29 percent of buyers of vacation homes paying in cash. If you need to finance your vacation home, the process may be a little different than financing a primary residence. Mortgage lenders tend to be stricter in their requirements for financing vacation homes. In most cases you will need to put at least 10 percent down; however, over 20 percent is recommended by many experts. Having a credit score above 700 will also help ensure that you get favorable interest rates on your new vacation property.
Maintenance is also something that you need to consider when purchasing a vacation home. A good way to estimate how much you will spend on maintenance per year is by taking one percent of the purchase price of your vacation home. The problem is that you will likely be away from your vacation home for much of the year, so it is likely that you will need to hire others to perform regular maintenance for you.
If you are away from your vacation home for much of the year, hiring a company that provides property management services can be very beneficial. Not only can these companies ensure that maintenance tasks are performed on schedule, but they can also be very beneficial if you decide to rent out your vacation home while you are not there. The cost of property management services varies; if you are using these services for renting out your vacation home, the cost is typically between 4 and 10 percent of the monthly income generated by renters. If you are using these services for property maintenance, a flat fee is usually charged.
When it comes to purchasing a vacation home, there are a plenty of things to consider. If you are financing your vacation home, the lender requirements are likely to be stricter. It's important to also consider the cost of maintenance when purchasing a vacation home. Property management services can help keep your vacation home in good shape while you are not there.