How to Buy a Vacation Home

Have you ever considered buying a home for vacation? If not, would you be glad to get it as a gift? Sure, you would. Nowadays, many people think about balancing work and rest. And that's fine, because timely rest saves you from work burnout and keeps you healthy.

If it's time for vacation, it's better to spend it away from home. In this case, a person enjoys the feeling of novelty and change of scenery. It’s nice to reduce the likelihood of sudden work issues and calls.

Pros and Cons of Buying a Vacation Home

Buying a vacation home has pros and cons like anything else in this world. You just need to decide for yourself what is more important to you at this stage of life.

Things to Consider When Buying a Vacation Home

If you do decide to buy a vaca home, you should think it through carefully so that you don't regret it later. It is an expensive purchase, and you definitely want to stay on the upside. It is important to evaluate whether you can sell the vaca home for the same amount of money or more. You have to be sure you don’t get tired of vacationing in the same place. Will it be easy to rent out the house? Are there a lot of tourists in that area? Most of these points depend on location.

Where to Buy a Vacation Home

A great view from the window of the vacation home (natural objects: mountains, forest, river, sky, lake, sea, beach, or already-built houses, monuments) always makes the rental more attractive. Few people will enjoy vacationing in a house overlooking a vacant lot, factory shops, or slums.

The higher the cost of buying a vacation home, the more developed the infrastructure is. But here, it is important not to overdo it. When lots of restaurants, nightclubs, and hotels are located nearby, the vacation may end without starting. It will be noisy, so no relaxing. But the presence of a pharmacy, grocery store, hospital, movie theater, or swimming pool always increases the demand for rentals.

Most often, the cost per square meter of housing is higher in the city center and lower on the outskirts. But if there are parks and modern buildings on the outskirts of the city, the cost can become exorbitant there.

In industrial areas, the environmental situation is always worse, so buying vacation property is cheaper. A house near a body of water will be more popular if there is no waterlogging during the tides. You also need to find out the weather conditions. Is there a rainy season?

Are there earthquakes? Who inhabits the body of water? Perhaps there are many snakes or poisonous insects in the area, so rental demand will drop.

It is worth considering that the cost of a similar vaca home will be different in different cities, as they are situated at different distances from the capital. In addition, these cities may have different numbers of people living there. The presence or absence of a railroad also affects the cost of renting and buying.

The good news is that you shouldn’t keep it all in mind. Therefore, you can turn to a realtor, or you can independently study the real estate market and the specifics of the place where you are buying a vacation home.

What Type of Vacation Houses Should I Buy?  

Once you've chosen the location, it's time to decide what type of vacation property you're interested in.

It could be a small house or a large one, a one-story bungalow or a multi-story cottage. Perhaps the number of floors is not important to you, but you are very fond of high ceilings and walls without slopes. Then a hunter house or an A-frame house is definitely not for you.

Perhaps you are comfortable with a garage in the house. Or the garage should be built separately, but with a covered gallery to keep you from getting wet during rain or snow.

Perhaps you feel better about having neighbors living close by. Then consider buying a townhouse. Or, conversely, you want to spend vacation on a farm.

Whether you want lots of separate guest rooms or large rooms for dancing and games? If your desires are constantly changing, you might consider buying a Finnish lodge: its design allows you to move partitions and floors quite easily.

Do you need a house with a large plot of land? Is it acceptable to have a neighbor's house a meter away from you?

Decide How You’ll Use the Vacation Home

Imagine you have already bought a holiday home. How exactly will you use it? You may come alone or with friends, every month or once per year. You may want to come and live and work there for a while. Then there should be a grocery store nearby. If it's a secluded place, your car should hold a lot of food and stuff.

If you plan to rent out your vacation home, then you need to calculate the profitability of this investment. First, you need to know when your income will start to exceed the value of the mortgage on your holiday home. Second, research the rental real estate market. Find out how much it costs to rent a similar holiday home in that area. What is the minimum number of renters you need to bring into your vaca home per year? How much does it cost to remodel your real estate to make it a comfortable place to live?

Perhaps you want to receive rent and still live in your vacation home. Then it's worth considering good soundproofing of the rooms so that tenants don't disturb you. Again, calculate the cost of these improvements.

Determine How Much Can You Afford for a Vacation Home

Buying a vacation home is different from buying an item, where you only have to know one number: the price of the item. Since real estate has a long life span, you need to add to its price the costs of maintaining it: property taxes and possibly land taxes, insurance, possible repairs, the cost of travel to and from the vacation home, utility costs, and fees for a caretaker or gardener. Do you have the right amount of money? And, if you have the right amount, are you sure that this money will not be useful for more important daily activities? 

Or vice versa: your living conditions change, and at the time of purchase, you do not have the full amount of money. For example, your income has decreased or, on the contrary, increased, but the arrival of money is not planned immediately. If you are sure that you can afford to buy a vaca home and this is your dream, which you want to come true right now, you can contact the bank and find out the terms of the mortgage for a vacation home.

How to Get a Mortgage for a Holiday Home

What is the main disadvantage of mortgage lending? Your purchase costs you more because you paid the right price for buying a holiday home, and additionally, you pay interest to the bank for using the bank's money. That is why you need to find out if your credit history allows you to take out a mortgage at a low interest rate. Will it be psychologically easy for you to pay years of interest to the bank on top of the purchase price and still enjoy your vacation home? You may wish you had waited to buy it and collected the whole amount to avoid overpaying the bank.

What documents do you need to provide to get the loan? How many years will you have to pay the mortgage on your holiday home? Will you be able to be a debtor for a long time? Getting payment reminders from lenders is quite frustrating. Is it possible to pay off the mortgage early, and will there be penalties in the form of higher interest? This is the minimum number of questions you should know the answers to.

Tax Benefits of a Vacation Home

If the property is owned, it is subject to tax, the amount of which depends on the country of residence, area of the property, its value, intended use, and other factors. Good news: the owner can get tax benefits, as summer houses are usually not a permanent place of residence. They simply are not equipped with the necessary amenities. That is, the value of such property is lower, so the tax is also lower. Sometimes the tax can be reduced if the homeowner's income is below a certain amount. You can find out more from the tax department.

Maintenance and Repair Needs

Before buying a vacation home, discuss with your family how this real estate will be maintained. Divide up responsibilities. How often are you going to go to the vaca house? How long will your visits last? Will you be able to fix or clean the entire area yourself during your stay? Perhaps you are only going to rest physically and not work around the house. Then consider where you will look for helpers if you need to repair something. Or will the guests or relatives you come with help you? Will they be able to help you every time you need it, or is it better to hire a repairman?

If you will be renting out your holiday home so it won't be empty, who will greet the renters and who will see them off? How much does it cost to hire a janitor, a gardener, or a receptionist? Consider yourself lucky if you have someone local to help you.

Find out about Vacation Home Insurance

You can save money by buying second-hand furniture and a minimum of household appliances. Of course, you may buy more goods, but it is not necessary. You can also buy a vaca house that is further away from the sea; this will reduce its cost. But you should not save money by buying insurance. You have already spent your money as you have purchased a holiday home. Now is the time to minimize the risks of further expenses. You must protect yourself and your property.

Insure your property to get money for repairs when an insured event occurs. There are insurances for all occasions: against natural disasters, against material damage caused by you and third parties, against robbery, and property loss insurance.

By the way, when you sign a mortgage agreement with the bank, you usually agree to insure the holiday home. Otherwise, the bank has the right to terminate the agreement and demand early repayment of the entire loan amount.

Work with a Real Estate Agent Who Specializes in Buying Vaca Homes

A real estate agent, or realtor, is a person who checks the documents before a sale is made. He or she is a guarantor when the buyer puts down a deposit. A realtor can also find you a better deal on a vacation home because it is their job to know the real estate market. You may get some tips, for example, if real estate prices go down throughout the year. Perhaps it is profitable to buy a holiday home in the fall or winter.

Best Places to Buy Vacation Property

During vacations, people regain their strength after months of work and try to improve their health. Many people go to the sea in summer because the iodine air heals the respiratory system, and sunbathing helps to get vitamin D, which is produced only in the presence of the sun. Therefore, it is absolutely logical that the best countries to buy vacation homes are those that have seashores and where there are many sunny days per year. An important point is the safety of travel, the absence of earthquakes and active volcanoes, the visa policy of the country, infrastructure development, a tolerant attitude toward foreigners, and the lack of overpopulated areas and slums.

The south of France, Italy, sunny Spain, Greece with monuments of antiquity, and mountainous Montenegro are only a few of the European countries that attract future owners of vacation real estate. We should not leave out Florida—one of the sunniest American states. According to the National Association of Realtors, located at 430 N. Michigan Ave., Chicago, IL 60611-4087, median sale prices are: $360,000 (Okaloosa Island, Fla.), $420,000 (Navarre, Fla.), and $360,000 (Palm Coast, Fla.).

There are plenty of options. The only limitation is your budget. Don’t forget, you may use a vacation home mortgage loan, though.

When you choose your dream vaca home, evaluate your decision from an investor's perspective. Before you make the purchase, you can change your choice. Think ahead, consult with experts, and then buy vacation property with pleasure. May it be a good investment for you.