You’ve Earned That Vacation Home, But First Get Professional Advice Before Buying
Vacation and Second Home Properties
If you are considering buying a vacation home or second home, there are many things to think about. Let a Buyer’s Agent guide you through the decision-making process to ensure that the transaction is both a smooth and enjoyable experience. (Maybe delete). Most homeowners are looking for vacation properties that are out-of-state; and out-of-state properties are subject to local restrictions, taxes, and regulations.
You also have to put into account how much time you are going to be spending at this property. Covenants, title issues, and well permits are just a few things that go from being simple annoyances to full-blown problems. A Buyer’s Agent can give insight on how to turn pitfalls into advantages.
Many homeowners find that condominiums are the perfect choice for an investment property. Without having to worry about performing routine maintenance and daily tasks, this gives your family more time to enjoy your home! Condominiums also offer amenities that are not easily available to single-family homeowners like swimming pools, shuttle services, game rooms, etc.
If you are looking to bring in extra income, renting your unit out to tourists is a great option. Depending on the length of their stay, you can rent out your unit on a nightly or weekly basis, which will help offset some of the ownership costs. There is a fee associated with these services, but those costs are distributed amongst all of the owners, making it more manageable.
What about the HOA?
All complexes have what’s called an HOA, or Homeowners Association. In most cases, with complexes, the HOA will hire a management company to handle the day-to-day tasks. On top of a management company, an HOA can hire a reservation service to help manage the rentals. Every year, the HOA hosts a meeting where they discuss items pertaining to the property and its management.
Understanding how the HOA functions and their contractual relationships is important when you are looking to purchase a property. It is recommended that you read through the HOA’s financial reports, rules and regulations and meeting minutes to get a feel for how they operate their complex.
One of the most important things to ask your HOA is what the dues are covering, which can range from trash to common amenities. These dues are typically collected on a monthly, quarterly or yearly basis depending on where you live. The price individual property owners pay for HOA fees is determined by potential maintenance issues.
Short-Term Rental Properties
In a situation where short-term rental income is possible, your management company will inspect and rate your unit on an annual basis. The goal of the management company is to attract as many return guests as possible, so they generally rent out units that are in prime condition first. This means that the owner of the unit will be generating more income, but also more wear and tear.
Have your management company explain your unit’s rating and walk you through the cost benefits of upgrading your unit. Depending on the location of your unit and how often you use it, you can get a rough estimate of how much money you can make from renting out your space.
Single Family Homes
When it comes to choosing the location of your vacation property, it is vital that you determine your needs and the function of this second home. You will need to consider the local zoning regulations, community rules and regulations, property taxes, utility costs, transportation costs, and more before committing to a home.
The Investment Strategy
After location, the second most important step is developing an investment strategy. You’ll need to ask yourself if this is a seasonal property, a place for the family to get together, or a weekend getaway. Or maybe you are considering purchasing a home, fixing it up, and renting it out. No matter, it is important to come up with strategies and possibilities for each situation before fully committing!
Out of every investment, you hope to generate positive cash flow and continue making money. Owning a single family home is a smart move because they are more likely to produce a positive cash flow compared to other properties. This is due to utilities, because unlike other rental properties, single family homeowners have to pay their own utility bills. Before you purchase a property, calculate all of the expenses, the amount you are going to charge in rent, and then you can set about spending your money wisely in order to maintain a positive cash flow.
Check out the Features
This property is going to be used for years to come, so you want to make sure that you like all of the features that are included in the home. Investors typically look at the number of bedrooms and bathrooms, the yard space, whether they have an attached garage, etc. This is important because the more features your home has, the more you can charge for rent.
Many people opt to buy land so they can design and build their dream home with their own specifications. However, there are many things to take into consideration before purchasing a plot of land. Not the least of which is paying for a survey and cost for pulling utilities to the property if they are not there already.
The first thing you’ll want to think about is the location of the land. If you have kids, you’ll want to research the nearby school districts. If you are relocating for a job, you’ll want to look at land that is close enough to commute to and from work every day. And if you are retired or getting ready to retire, you’ll want to look at land that is within close proximity of recreation centers, gyms, medical facilities, etc.
When visiting plots of land, one of the most important things to ask your realtor or the seller is what utilities are provided and what they will cost. Make sure you are informed about:
- Municipal Water and Sewer
- Waste Management
- Power/Energy Companies
- Phone & Internet Providers
Before committing to a plot of land, you need to find out whether or not the plans you have for your home are going to be feasible. Get in contact with your local authorities to learn more about their zoning requirements. It doesn’t hurt to ask about future zoning projects as well. The last thing you want is to be settling into your new home, and then come to find that they are going to be building a shopping mall right next door.
Another question to ask the seller is if they have an ACC (Architectural Control Committee). If the answer is yes, the ACC must inspect and approve your design plans before you can proceed. During the inspection period, it would be smart to bring in an engineer to conduct a few tests. From there you can gauge how easy or difficult it will be to build on the site.
Connect with A Buyer’s Agent Today!
There are a myriad of questions that need to be addressed before investing in a second property. Doing research and visiting several sites will help make this process and the end result that much more enjoyable. Just remember that you are not alone in this process! Buyer’s Agent is here to help you navigate through the process until your purchase comes to fruition.