Many people dream of owning a getaway oceanfront condo, a mountainside lodge or a lakefront cottage while they peruse through expensive hotels to book for that trip they want to make or while skimming through a rentals online calendar for their available dates. But before you press the buy button on your favourite vacation home, have a look through the pros and cons of the decision.
Pros of Owning a Vacation Home:
- Generate extra income:
You won’t be using the vacation home for all 12 months, will you? In that case, it is the perfect idea to put the residence up for Rental or Airbnb and generate some extra cash. Studies show that the average Airbnb vacation home host makes 924$ per month. You can even rent out the property to tourists or families that wish to live for an extended period of time. The best part though is that during peak vacation seasons you can hike up the rental rates as well thus earning more for shorter stays.
2. Diversify your investment portfolio:
Staying in the realm of finance, there is no better way to enhance and enrich your investment portfolio than to look into Real estate since in most cases it is a good hedge against how volatile and unpredictable other investment routes can be these days, as real estate values tend to appreciate over time making them a safe and healthy option for financial security, and depending on the amenities included in the vacation home you decide to own you might just be able to make 15-20% more revenue if cashed in at the right time.
3. Last-minute private getaway:
A huge perk of owning a Vacation home is that you have the liberty of deciding when to take the trip at your behest without having the headache of reading up reviews of nearby or booking a resort. It is yours for whenever you want to make use of it. Giving you the flexibility to plan your trips whether it be a romantic getaway with your significant other or a family reunion that you have on your hands.
4. Vacation like a local.
When you are in a place you want to explore to its fullest and make the most out of your time like enjoying local festivities and, exploring the culture, food and community then there is no better option than to own a Vacation home, it really allows you to experience the place in a truly new way.
5. Retirement Planning:
Picture this, you’re in your late 60’s 70s sick of the hustle and bustle of the city and want to retreat to somewhere much more peaceful, scenic and quiet with better ratings on the air quality index. Then investing early and wisely in a Vacation home is the perfect idea for you, you can rent it out right now and then once you’ve made the decision to finally retire you will have a ready-made retirement residence at your disposal.
Cons of Owning a Vacation Home:
Now it can’t be all sunshine and rainbows, right? There have to be some downsides to owning a second home and they go as follows:
As previously mentioned, rental income may be one of the greatest benefits of owning a secondary residence. It isn’t completely guaranteed to generate revenue in all four seasons. It may just be good once a year and if that happens to be at the same time you wish to use it then you may want to look into factoring it in if you wanted to own the secondary property strictly for passive income generation.
2. Difficult Financing.
When buying a vacation home it needs to be considered how no matter what type of vacation home you buy, owning one can be significantly expensive and you will need to seriously increase your budget considerations. If you’re thinking of opting for a mortgage to make home financing easier it may not be as good an idea as you may initially think as you’ll find mortgage requirements to be much stricter with much higher interest rates, higher credit score requirements and much larger down payments.
3. Management Can be a huge Stress:
Since you won’t always be at your vacation property, it can be a huge pain to manage the property, things like home repairs and regular upkeep will always be a strain on your monthly budget planning not to mention the cleaning, emergency repairs, theft, property damage etc. This may require you to hire a property management company which can be a huge additional expense to keep up with.
4. Same place again?
It is very much possible that having a vacation home makes you feel trapped and severely limits your vacation options. Because now that you own a vacation property in a certain place you will want to utilize it to the max or maybe you simply cannot afford to go elsewhere for a vacation while paying for your primary and secondary home every month, which may mean going to the same place every time which may become a mundane practice after a few years and take the charm out of it.
5. Out of sight, out of mind?
Adversely, you might impulsively think of it as a good decision to buy a Vacation property, somewhere you love only to find yourself going back there once every few years, if even. Having that dream getaway resort sounds good but at the end of the day, it just adds up more stress to your finances.
So now that you have the pros and cons of owning a vacation home, you can easily make a decision. If you have that kind of money you can go for a vacation home at your favourite place. It can be a getaway home for you and your family where you de-stress from your daily life but only if it brings you more comfort than stress.