Thinking of buying a vacation home – here are some things to consider before jumping in.
The Wall Street Journal recently published the article 'What to Consider Before Buying a Vacation Home' by Jeff Brown, and although it is based on the US market, a lot of the questions and issues raised are pertinent to any vacation housing market.
To summarise the article, here are the main questions to consider and give thought to – they might determine what type of property you buy or the location you choose.
1.Why are you thinking of buying the property? Is it for your own personal use, for future retirement, an investment due to low price or anticipated potential price appreciation or rental? If it's a mix it might be worth considering how your use will affect possible rental income and the clashes that might occur especially in the high seasons.
2.What is in the local vicinity? Location, location, location! It's a cliché but crucial, particularly if you are buying for a holiday rental. Think about what people want out of a holiday – beach, pool, golf courses, shops, restaurants, bars, attractions, water sports? What type of holiday makers would like to stay in your property? If you are buying as an investment then the local area's development plans will be a major factor on the property's potential price appreciation so research the plans fully. As Mr Brown states, “…. a lot of construction may mean the location is hot – or that a glut will depress rent rates and sales prices”.
3.What costs and profits can I realistically expect? When you buy a property in a gated community/complex there tend to be certain maintenance costs that need to be considered and built into your costings whether it's for personal use or a rental. Also, if you are not located nearby there may be additional costs associated with management, cleaning, property maintenance/repairs, insurance etc. Research the local area to see what other properties are being rented for and the levels of demand – what can you charge to encourage business. Are you buying in an area that is seasonal? If you want to rent all year round remember to check to make sure local amenities are open in the low seasons too. How are you going to market the property – what costs are involved?
4.What are the local rules and what are the tax implications? Don't assume that rules and regulations are the same as your 'home' country. Check to make sure you are aware of any property taxes you may be subject too. Does the complex/home owners association allow rentals?
The article is very informative and well worth a read to make sure you have considered all aspects of owning your own vacation home and if we can be of any help in finding your ideal property that please do contact us.