Second Homes
Question: Should I buy a vacation home?
Answer: The second home market has more ebbs and flows than the primary home
market. Sales are iffy in a bad economy except, perhaps, on the high-end. That
said, there is a growing trend toward the purchase of vacation homes. They are
being bought for investment purposes, enjoyment, as well as retirement. In the
latter instance, some people are buying with the idea of turning a vacation home
into a permanent retirement haven down the road, a move that puts them ahead of
the game now. Some of the tax benefits of a second home mirror those for a
primary residence. Before taking the leap, however, ask yourself if you can
afford to carry two mortgages, maintain two households, and pay the extra
utilities and maintenance costs. Also, learn about financing requirements and
options, which can differ slightly from those on a primary residence.
Question: What about a vacation home as an investment?
Answer: Like any investment, it can be risky. Location and current market
conditions are extremely important when deciding whether to buy. Other things to
consider:
Will you be able to afford repairs, maintenance, insurance, and utilities?
What about fees to pay agents who rent the property for you?
If you live several miles away from your vacation home, who will clean up
between tenants and take an inventory of household items once the tenants leave?
What if you are unable to rent your second home? Can your pocketbook withstand
the strain of paying the mortgage?
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