Buying a Vacation Home

Is buying a vacation home still a good idea in the current real estate market we are in? How does a slow real estate market affect the buying of a vacation home ... or does it? Can I get a good deal on a vacation home purchase because of the current market?

These are just a few of the questions people will have when thinking about buying a vacation home for investment purposes. In truth, it's difficult to answer these home buying questions across the board, because every real estate market is different, every home buyer is different, and every vacation home scenario is different.

But we can certain offer some insight that applies to most vacation home-buying situations.

Buying a Vacation Home in a Slow Market

Let's think about the basic process and motivation of buying a vacation home for a moment. The usual goal here is to buy a home in a popular vacation spot for three reasons:

1. You want to take your own vacations there.
2. You want to rent the home to other vacationers.
3. You want a solid investment property.

So how does a slow real estate market tie into all of this? Well, it might mean that you can buy a vacation home in a popular area for far less than you would pay later on, when the market turns upward. So from an investment standpoint, buying a vacation home in a slower real estate market could benefit you in the long run. Ah, but there's that "could" word again ... nothing in real estate investing is a guarantee.

Other Benefits to Owning a Vacation Home

If you choose a location that's a current hot spot (and it remains "hot" in the future), then buying a vacation home can be a wise investment -- especially if you get a good deal on it because of a slow real estate market. Generally speaking, vacation homes tend to hold their value extremely well. This is even more true when the home is located in a vacation spot that has been popular for a long time (and will likely remain popular).

Buying a vacation home also has obvious benefits for your own leisure life. By owning a home in a nice vacation area, you can save money on your own vacations.

And, of course, there is the revenue factor. People who are smart about buying vacation homes can make a nice profit from it, by charging more for rental than what they pay on the mortgage every month.

Of course, this will take some careful research on your part. You'll need to know what the average rental fees are in a particular area for vacation homes similar to the one you're considering. Only then can you factor in the potential rental revenue to compare it with your mortgage expenses.

The Downside of Vacation Homes

This article is not meant to suggest that buying a vacation home is always a good idea. Nothing could be further from the truth. If you don't play your cards right, or if you fail to do the proper research, your vacation home become more of a money pit than anything.

For example, if you buy a vacation home in an area that's trendy at the moment, but not so popular 2, 3 or 5 years from now, your investment could go south. Also, if you choose an older home that needs constant maintenance and upkeep, your expenses could negate your profits -- even if your rental fees are higher than your mortgage payments on the vacation home.

Here's a related article on the subject of buying vacation homes that you might find helpful:


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