Have you found a place that you love to visit while traveling? Then you might be interested in buying a holiday home. Before you scoop it up, though, make sure you consider these 5 important things below. That way, you’re more likely to love your second home instead of having second thoughts when it’s too late.
CONTENTS: In this article you will learn important things you should consider before you buy a holiday home, including:
- What is a Holiday Home?
- Benefits of Your Own Vacation Property
- Legal Requirements
- Making Money
- Location, Location
- Final Thoughts on Buying a Holiday Home
What is a Holiday Home?
A holiday home is a cottage or other property that is secondary to your primary residence. Depending on where you live, it’s also called a “second home,” “vacation property,” or “holiday let.”
As the owner, those terms all mean the same thing: You have a little slice of heaven that you can return to as many times as you like throughout the year, and a little income if you rent it when you’re not there.
But if you’re taking out a loan to buy the property, the banks may differentiate between these terms. For instance, an investment property is a bigger risk for the bank compared to a second home. On the plus side, you may have better financing options as a second time buyer.
So get clear on your intent and choose your words carefully when it comes to financing your holiday home.
1. Benefits of Owning A Holiday Home
When you buy your own vacation home, it is going to save you from continuously spending a fortune on hotel trips. This is helpful because it can make your vacations more budget-friendly. Remember that the money you are paying for your vacation home is an investment and will create equity.
Having a holiday home also gives you a chance to build a sense of familiarity in the community. You’ll get to know the hidden gems and best places to go the more you visit. You may even get to know the locals. Having your own home for vacations is a great way to know your favorite destination more intimately.
Your vacation home also provides you with a better sense of security while you’re traveling. No more worrying about whether you’re sleeping in a safe location, or fiddling with finicky lock boxes and foreign security systems. This place is yours.
Plus, you won’t have to pack up so much stuff for vacation if you store it at your second home. You can have everything from your favorite cooking utensils to your beach gear at the ready when you arrive.
A Place You Can Always Go
The best thing is, no matter what situation you find yourself in, you’ll always have a retreat that you can visit.
Does this all sound wonderful to you?
It should because it is! There are so many good reasons to buy a vacation home.
But before you commit, make sure you know the complexities of buying a holiday home. There are pros and cons of a holiday home you need to think about and keep in mind. This is particularly true if you are planning on leasing it out to other people taking trips. It’s a great way to make a holiday home a more financially smart purchase and a sound investment.
So, let’s dive in.
2. Legal Requirements
You’ll need to think about the legal requirements of a holiday home. This is going to be important if you plan to let out the home rather than just using it for you and other members of your family.
For one thing, learn about the noise monitoring requirements for vacation rentals. This will often depend on the property that you are buying and the location. Sometimes, gated communities have special rules so you’ll want to be thorough about understanding how that affects renting your place out.
It’s also important to think about where your legal responsibilities begin and end as the owner of a property like this.
Laws about taxes, licenses, and liability vary from state to state and of course, internationally if you buy a holiday home abroad. So do your homework to eliminate any risks and costly surprises.
3. Making Money
Of course, if you are going to let the home out when you’re not using it then you’re going to want to make money.
You’ll need to think about the right price to charge and how to market it effectively. You should always start by researching other homes in the area for comparison. Try to find out the rates that the owners charge.
You could also base your rates on your financial goals and how quickly you want to cover the cost of the home.
In terms of marketing your property, it could also be important to hire a property manager to handle everything for you, so factor that into your pricing.
Did you know some empty-nesters use a second home as part of their retirement strategy?
Rent the vacation home when you’re not using it to pay down the mortgage. Then, when you’re ready to retire, downsize your primary residence and move into the vacation property. This way, you’ll net money in the bank and have already paid down (or paid off!) your retirement home.
Related Article: Another retirement strategy is to adopt a nomadic life-style and make your RV your primary home.
4. Location, Location, Location
Next, let’s think a little about the location of the holiday home you are interested in.
You might already have a location in mind and there’s nothing wrong with this. Remember the movie Under the Tuscan Sun? Frances fell in love with this beautiful villa in Cortona Italy that needed a lot of work! The point is, try not to be too impulsive, even if you are absolutely star-struck with a place.
In addition to the property itself, you should check that it’s in a strong location, particularly if you are planning on letting out the home.
One way that you can do this is by assessing the demand for the area. For instance, if you buy a holiday home in a place like Cape Cod, you are always going to see a high level of demand, because it’s a popular family destination. That makes it one of the best places to buy a vacation home in the world.
Of course, this is just one location factor to keep in mind.
For instance, you should also think about weather conditions. If the weather is poor in an area where you’re buying, then you might need to consider issues such as insurance and additional levels of maintenance.
Related Article: Explore these towns and villages of Cape Cod, MA to decide where you’ll buy your vacation home.
Finally, it’s important to consider the security elements of a holiday home.
When you buy a holiday home, you need to be prepared for the fact that it may quite possibly be empty for a long time throughout the year. Even if you do decide to let it out, there are down seasons where you will not get much interest from holiday goers.
If that’s the case, you need to make sure that your holiday home is going to be safe and secure.
One of the ways that you can do this would be by investing in remote Closed Circuit TV (CCTV) systems. With a system like this, you will be able to keep a check on your holiday home while you are not there.
Another option is to hire someone to check in on your property and maintain it as needed.
Finally, you might also want to buy a holiday home that is part of a gated development. While you might need to pay higher upkeep costs, it could be worth it because of the peace of mind you’ll have when your property is empty.
Related Article: Click here to learn how to keep your home safe when you’re not there.
Final Thoughts on Buying a Holiday Home
You now understand some of the key points to consider when you are thinking about buying a holiday home. If you keep these factors in mind, then you have looked into the most important details before jumping at this possibility.
That way, you won’t have to worry whether this decision was a mistake a little further down the line. Whether you buy a French holiday home, an Italian villa, or a cottage on Cape Cod, chances are you’ll be too busy enjoying your home away from home.
If you’re thinking of renting out your property, continue reading to learn how to get your home ready as a holiday rental.
Photo credits: Feature aerial – McBee, poolside – Pixabay (Pexels), all other photos courtesy of Canva Pro.
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