Buying a vacation home can be a dream come true for many families. Imagine being able to visit your favorite beach or national park at any time during the year. However, owning a vacation home can also be a big financial undertaking. Let’s look at some important considerations for anyone thinking about buying a second home.
How often you’ll use it
For many, buying a vacation home means taking out a mortgage. The home comes with other expenses as well, like maintenance, upgrades, and utilities. Because of the costs, it’s important to consider how much, realistically, you’ll end up using the home. Will it be a few weeks per year? Are you buying it with family members who will also get plenty of use out of it?
The size of your vacation home can impact the cost as well as what you can use it for. Consider how many people will be staying in the vacation home at one time. Do you plan to host large gatherings? Or is your vacation home more of a getaway for yourself? Answering these questions can help you find the right home to buy and settle on a budget.
Where do you want the vacation home to be? If you’ve decided on a particular town or city, it can help to narrow down your options from there. For example, are you looking for something right on the beach or are you okay walking a few blocks or even driving? Is it important that you’re close to shops or amenities?
This is also a good time to think about any additional costs required to travel to your vacation home, such as plane tickets, rental cars, or purchasing another car.
Whether you’ll rent it out
Many people choose to rent out their vacation home to help offset the costs of owning a second home. If you decide to rent out your vacation home, you’ll have the added responsibility of finding people to rent it, as well as responding to any questions or issues that arise. You can choose to handle this yourself or hire a property manager to handle the bulk of the work.
Repairs and upgrades
Just like in a primary home, a vacation home is subject to repairs and upgrades. If you live far away, you may not always be onsite during the repairs. It may be helpful to hire someone who lives nearby to take care of maintenance, especially if you’re renting the home out.
Consider how you’ll pay for major repairs and upgrades—will you borrow against the home’s equity, use cash, or even borrow against the cash value of your whole life insurance or universal life insurance? Whatever your choice, it’s important to have a plan in place for when costs arise.
The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value will reduce the death benefit and may affect other aspects of the policy.