How to Evaluate a Vacation Home Before You Buy

Whether you plan to buy a mountain hideaway or a beachfront condo, evaluate a vacation home just as you would your primary residence.

Difficulty: Moderate

Instructions

Things You'll Need:

• Local Newspapers
• Home Comparable Reports
• Home Inspection Report

1. Establish prices of comparable vacation properties that have recently sold in the same area as the property you are considering. View data in the real estate sections of local newspapers or contact a local real estate agent to make sure the property is priced fairly.

2. Inspect the property or hire a home inspector to detect any defects or needed repairs.

3. Evaluate the condition, style, comfort and resale potential of the vacation home.

4. Ask local rental management companies about the typical rental and vacancy rates for high season and off-season.

5. Learn about all costs associated with the vacation home, such as insurance, utilities, private association dues, maintenance fees and municipal taxes.

6. Determine if there are nearby amenities such as snow skiing, beaches or national parks that will help the property to maintain its value and provide a constant source of potential buyers.

Tips & Warnings

• Take the evaluation of your vacation home just as seriously as you would take the evaluation of a primary residence.
• Rental income can help you offset the cost of buying and maintaining the property.
• Vacancy rates in the area where you're buying will indicate the popularity and desirability of the region.
• Ask at least five owners in the area if they are happy with their choice.
• Occupying a vacation property for more than two weeks out of the year that is considered a rental will affect the tax benefits of the investment. Consult a C.P.A. or tax preparer to understand how the rule may affect you and your right to use the property for personal use.