Please note: this is a contributed post.
There are lots of reasons why many people are interesting in buying a second home. Some people want to retire far away from their old work-centric life, others want an investment to protect their money, and some just want somewhere gorgeous and relaxing to retreat now and then. A vacation home is one of the most ambitious and idealistic manifestations of all those goals. However, if you want to do it right, you need to get ready to do some research.
Figure Out Your Purpose
When you’re trying to make the best investment in a vacation home possible, then you need to think about why you’re doing it and what your goals are. For instance, if it’s purely an investment, then you need to consider where you can find a property that’s suitable for tourists, not just for you, and the efforts you need to take to run it like a business. If you plan on retiring there, you need to be aware of the legal steps if, for instance, it’s in a foreign country where you don’t have citizenship. Figure out your goals so you can always keep your priorities straight when looking through the housing market.
Affordability Comes First
The process of investing in overseas property, in particular, can be very expensive. We will cover all the others costs in a moment, but let’s keep in mind how much you’re going to be paying for the loan. Figure out how much you can budget right now and how much of a down payment you plan on putting down once you’ve found a few properties that look interesting. Use a mortgage calculator to take into account the different loan options available to you and then figure out how much it’s going to cost from month to month. Never buy a property if you’re not certain that you can afford the monthly payments. You don’t want to ever hear the word “foreclosure.”
Figuring Out the Costs
The mortgage isn’t just the only cost to figure out when you’re talking about overseas property. Before you start looking seriously at properties, or getting in touch with a realtor, you need to put together a budget for the whole process which involves a lot more than just the down payment. Some of the costs you need to consider include the option to purchase, the offer to purchase, buyer’s stamp duty, legal fees, valuation fees, and much more depending on the specific location or country in which you want to buy your vacation property. Do your research and figure out all the additional fees and costs that come with a property purchase. If it turns out these additional expenses are larger than you expected, then you need to look elsewhere or take the time to save more before you buy.
Location is Crucial
Once you’ve figured out your vacation home budget comes the slightly less stressful, but just as vital decision, of deciding exactly where you’re going to buy property. With a vacation home comes not only your own personal enjoyment but the potential that you might be renting it out to other vacation-goers, as well. If that’s the case, you need to scan the market for a house for sale that not only meets your own wants and needs (not to mention budget) but also has plenty of appeal for other travelers.
Is the property close to any of the more popular tourists attractions with plenty of parks, museums, restaurants and retail areas? Does it have easy access to public transportation? Is it easy to reach from the airport and cruise ship ports? You don’t want to pick a location that has little to offer anyone who might be interested in renting your home.
Try Before You Buy
Your own enjoyment of the particular area you’re looking to buy in is also paramount. Most people buy in countries or regions that they already know and love. However, there are those who pursue dreams they haven’t had the chance to sample, only to find out that the culture shock is too large to surmount, or they didn’t realize the cost of living would be so high. It’s definitely worth taking the time to visit the area you want to buy in for a week or two before you commit to buying property there.
Taking Time to Visit
If the vacation home is for your personal use just as much as it’s for the investment potential, then you need to ask yourself how often you will really get the opportunity to visit. Will it be a couple times a year, an annual thing, or even more infrequently? Is it worth the investment to only use a property three or four times in a decade? If you don’t currently find much time for vacations, you might start looking into how you can open up your schedule a little more. Naturally, if it’s for retirement or rental purposes, this might not matter as much right now.
Keeping Up with Maintenance
If your vacation property is only for personal use, then you don’t need to worry about how well-kept the home is in your absence. Unless something goes wrong, no-one should be setting foot on the property when you’re not there. However, you need to make sure that it’s kept presentable for new tenants. Many people who own vacation properties will work alongside rental real estate agents or hire a cleaning or property maintenance company who can take care of your home in your absence.
Treat Your Vacation Rental Like a Business
With the aim of making a rental income also comes the need to treat it as more than a home or an asset. The cliche is that it takes money to make money. Again, you can pair with rental agencies to help you rent out your home to help you determine the best ways to market your rental home. You also need to think about whether you’re getting a home that will be profitable in just one or two seasons or if your property has annual appeal. Do your research on how to profitably run an overseas rental property.
Know the Legal Implications
If you’re buying a property in another state, there may not be too many legal barriers. But, if you’re buying a vacation home in another country, that’s a different story. As mentioned earlier, if you’re planning on eventually retiring or living in your vacation home, you have to know what the path to citizenship is before you buy.
You also have to consider the tax implications on a second home. If it’s a rental property as well as a vacation home, you will be taxed as a business on top of the property tax. For the actual buying of the property, you need your own, independent legal advisor who knows the real estate laws of the state or country you are interested in.
If you’re not careful when investing in a vacation home, it can be a lot more complicated and expensive than it needs to be. Don’t rush into anything. Take your time, do your research, and work with a reputable estate agent rather than jumping at the first opportunity that comes your way. Happy house hunting!
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