A vacation home is truly one of life’s ultimate luxuries. But it’s also one of the best long-term financial decisions a homeowner can make! Owning a vacation home is not for everyone though. There’s the stress of upkeep on a second property to consider and the how-to of managing renters and renters insurance. If you’re thinking about purchasing a vacation home, you’ll find the following tips valuable as you weigh your options.
A vacation home sale differs in many ways from the purchase of your first home. For one thing, there are no friendly breaks from the government like tax incentives on secured loans. On top of that, you won’t be able to deduct the mortgage interest on accumulated debt over $750,000 (a number that is easy to hit with two mortgages).
You’ll need a blemish-free financial history regardless of whether you plan to rent the second home or keep it for yourself. So, what’s your first step toward buying a vacation home? Calculate the long-term expenses (property, taxes, water bills, etc.) along with the price of the mortgage to project future costs and determine what you can afford.
Want to rent your home when you’re not there? It’s a great option, especially with services like AirBnB that make it easy to advertise your gorgeous home to eager renters around the world. A word of warning: it is also because of AirBnB that many cities have adopted more stringent, short-term rental rules. Check the area for city zoning and administration codes, and understand all rental regulations before you buy.
You’ll also want to create a system ahead of time for finding responsible and financially savvy renters. To get good tenants, you’ll need a thorough application process that includes background checks and requires renters insurance. The best rental properties are homes, guest cottages, or apartments in low-crime areas with plenty of job growth or tourism appeal.
If a second home sounds right for you, call Synergy Insurance Group to learn more about our homeowners insurance policies. We make it easy to customize your policy so you get exactly what you need without paying for anything extra.
Want to learn more about exactly what’s covered in a standard homeowners policy? Our Home Insurance Claims eBook takes you through different scenarios and explains whether you’d be protected. Click the graphic to get your copy, and protect your homes with ease.