Written by Jim McKinley. Visit him at his home, Moneywithjim.org ( jmckinley@moneywithjim.org )
Getting a vacation home can be a dream come true, especially during our retirement years. Of course, with that comes its own unique set of challenges. To keep costs down, you need to have a foolproof plan in place before you make an offer. Here’s what you should know.
Why It Matters
A vacation home can be a dream refuge, but the right one could also be a shrewd investment. That doesn’t mean it should be flipped overnight; however, it might eventually become an asset that adds to your financial security. After all, it can be rented out for profit, which can help pay off associated property taxes or even the mortgage itself. Over time, the property may gain in value because it’s in a prime location or has desirable features. So, as you search for a second home, focus on houses that have all the ingredients to work as a long-term investment.
Focus on the Future
Thinking ahead also means having an idea of how that vacation property will serve you. Yes, it may be perfect now, but what about the future? Your health may be in top shape today, but will it help you age in place safely? That could mean choosing a ranch-style property for ease of mobility or one with a small yard to limit maintenance. Similarly, what about the destination itself? While the property may be adaptable, the town may have accessibility issues. This could become a problem over time, and it might make vacations a little less enjoyable. Therefore, as with your home, thoroughly research the area to see if it’s perfect for you.
Deciding How to Maintain It
Owning a vacation home will including figuring out how you will maintain it. When you are nearby, you can simply check in whenever needed and supervise any necessary maintenance yourself. Of course, a vacation home should be about relaxation, and you may not want to spend all of your time cleaning or doing other chores. Moreover, distance may actually require you to seek help from others, such as a local cleaning service. Similarly, you won’t likely be on hand to deal with any security issues, so installing an alarm system is a must. It’s a good way to stay on top of things without eating into your personal time.
Finding the Best Insurance
As with any property, navigating insurance is necessary to get the best deal possible. For instance, home insurance can add up quickly, so you’ll need to keep your rates down. Yet, you also want enough coverage to be safe, such as liability insurance for a potential rental, or a natural disaster policy if necessary. So, to keep rates low, get a home security system, as you may get a discount; see if your provider will knock a percentage off your total for a bundled policy. If you do decide to rent your property out, check out guaranteed income and emergency insurance as they can help with broken appliances or missed rent.
Minimizing Your Costs
You deserve a vacation home that doesn’t burn up your savings or cause any financial stress. That’s why it’s important to avoid properties that could become money pits, or require a lot of investment. So, look at low-maintenance houses that are in excellent condition, and bring in a home inspector to identify any potential issues. If you can avoid dealing with repairs, you’ll save yourself money in the long term. In fact, a quality home could even make money since it can be rented out when unoccupied. This has the added benefit of working around your schedule, as your home can be rented for as long as you want. Best of all, with the right guests, your property can stay secure and looked after without a dime being spent.
Don’t let your finances or fear of taking a risk stop you from getting the vacation home of your dreams. With a bit of preparation, you can even get extra income to help cover the costs. This is your time to live life as you have always wanted.
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