If you’re contemplating buying a vacation home, you’re in good company. According to the National Association of Realtors (NAR), after a lull during the housing market collapse, the vacation home market is robust. Whether your dream getaway is a seaside cottage or a mountain chalet, you’ll need NJ Vacation Home Insurance, of course. You also need to know how to buy a vacation home guided by reason rather than emotion. Here are some tips for doing just that.
Location matters. You may fall in love with a property, but if it takes you 8 hours to drive there from your primary residence (or requires you to board an airplane). How often will you actually go? According to the NAR, most vacation home buyers choose a property about 180 miles from their residence. Not too close, but not too far.
Consider renting first. Unless you’re already familiar with an area, spend time there before buying. Rent a home there for a week in the summer and a week in the winter so you’ll get a feeling of what life is like during the busy season and the off season. Renting will also help you pinpoint which neighborhoods you like best.
Crunch the numbers. You definitely do not want to buy a second home you’ll struggle to afford. After all, a vacation home is meant to be a respite from your daily stresses – not a contributor to them. Think small. Set a budget and try to find a home under that budget. Make sure to plan property taxes in that budget (in some areas taxes on second homes are far greater than primary residences.) Talk to an accountant about the tax ramifications of buying a second home. Especially if you plan to rent out your vacation home, you’ll have to pay income tax on the rent you receive.
Don’t make a hasty decision. Emotion comes into play in most real-estate transactions. It can be easy to get caught up in the moment envisioning fun-filled summers at the shore with your future grandkids. Once you think you’ve identified a great option, take a step back and take a few days to make sure you can afford it, will use it, and that it really is “the one.”
If you’re purchasing a vacation home, congratulations! We’d like to be part of this exciting time by crafting an insurance policy to protect your investment. Contact us at Tri-State Insurance Agency to get started.