Rent Vs. Buy Vacation Home
A vacation home appeals to many travelers over a hotel stay because of the amenities and conveniences. Whether you visit the same place each year or stumble upon a new location that takes your breath away, the thought of buying a vacation home may cross your mind. Before you gather a down payment for a second home, consider the pros and cons of each option.
Other People Are Reading
-
Benefits of Buying
-
When you buy a vacation home, you invest in the property rather than paying your money to someone else for a home you don't own. You can also offset the cost of buying the vacation home by renting it out to others while you aren't using it. A local property management company can handle renting the home if you don't want to deal with it long distance. When you own a residence in your favorite vacation destination, you won't have to worry about finding accommodations, even during the busy season. Your choice of location within the area is secure. If you rent a vacation home, you may have difficulty finding something in the specific area of town you want.
Benefits of Renting
-
When you rent, you have more flexibility on where you stay. You aren't locked into the same destination for every vacation so you get to see more of the world. You eliminate all of the extra costs that come with owning a home, including a monthly mortgage payment, taxes, maintenance and insurance. You have less responsibility because once your stay is over, the home you rented once again becomes the responsibility of the owner. While you won't earn any equity by renting, you also won't lose money on the investment if the real estate market takes a dive in the area.
-
Factors
-
Analyzing your vacation habits and your financial situation helps you determine if buying a vacation home is feasible. Your financial stability is a major factor in the decision. If you have enough money for a large down payment and can afford the monthly mortgage payments with extra room in the budget, buying may be an option. Don't rely on rental income from other vacationers when making the financial decision. If you don't afford the mortgage without rental income, stick with renting. Consider how long you plan to own the home if you buy. If you only want to keep it a few years, you may lose money should the housing market crash. Another consideration is your preferred vacation destination. You may love a particular area, but visiting it for every vacation gets old to some people.
Tips
-
If you are considering buying a vacation home, don't think of the purchase as a way to get rich. Choose a home and location because you truly love it and want to visit often. The real estate market changes quickly so you could end up losing value in the home, but if you're buying because you want to be there for years you still come out ahead. If you plan to rent out the home when you aren't using it, keep in mind this cuts down on your ability to make an unplanned, last-minute trip since it may already be rented.
-
References
- Photo Credit Comstock Images/Comstock/Getty Images
