|
Vacation Home Buyer The second home market is booming! In fact, recent studies by THE NATIONAL ASSOCIATION OF REALTORS? report that 23% of all homes purchased in 2004 were for investment, while another 13% were vacation homes. There are about 72.1 million owner-occupied homes in the U.S.  Many lenders require buyers to put down at least 20% on a second home, and some require 25% or more.
Renting out a vacation home is a good way to cover some of the cost, but lenders often factor in a 25%
vacancy rate when determining your qualification for the loan.
The lesson is clear: Don't be overly optimistic on rental income--and you're nuts if you think the
vacation home will pay for itself immediately and in perpetuity. A vacation home can be just about
self-sustaining, but it takes careful planning and hard work. You shouldn't buy a second home on the
assumption that it will pay for itself.
If you plan to rent your vacation home, it's a smart idea to post the rent 10% to 20% higher than
your monthly mortgage payment in order to cover costs. Chances are you'll have to hire someone
to maintain the property in your absence, and unexpected repairs are a given.
Also remember that the most lucrative times to rent are the same times when you and your family will want to enjoy
the getaway--summer and Christmas.
You'll also have to decide what type of property you want: a house or a condo. Condominiums are great because
routine maintenance is included in the association fees, so you won't have to hire anyone to cut
the grass or make routine repairs.
Here are several steps you should keep in mind when considering a vacation home purchase.
|
Equal Housing Opportunity