Planning on Buying a Vacation Property? Consider These Costs First!
Owning a vacation property is a great idea so that you can always have a place to call your own at your favorite holiday destination. When you are not vacationing in your property, you can always rent it out and it would make a great investment. However, there are certain expenses that you must consider when it comes to buying a vacation property. Whether you have plenty of money to spare or not, it is very important to be aware of these costs before you make your decision to buy a vacation property.
Property management costs
Managing a vacation rental is not something that you can’t or shouldn’t do. Unlike residential properties that are jointly maintained by the owners and tenants, vacation properties will have to be handled in a different manner. Unless you live nearby, managing it on your own is highly unrealistic. It is very important to have someone to manage tasks such as cleaning, preparation for renters, being on call for emergencies and repairs as well as handing over the keys. If your property has plenty of outdoor space (eg: waterfront property), you will have to keep a landscaping crew at hand to keep things clean and presentable at all times. This is an expense that you must consider when you think of buying a vacation rental. If your property is not managed properly, its value and the interest that people may have in renting it could go down drastically. And don’t forget about those pesky H.O.A. fees.
Cost of furnishings
The rental will have to be properly furnished with good quality pieces to ensure the comfort of your renter as well as your costs for repairs and maintenance. If there are other rentals nearby, your house will have to compete with them to make sure that renters don’t walk away. Good furniture does not come cheap! You will have to put aside a sizeable amount to outfit your place for renters at the start.
Prime time rentals
If you are renting out your holiday home, then you will need to know that you won’t be able to enjoy it during prime vacation times of the year if you plan on covering your cost with rental payments. Peak travel seasons during the year can have renters clamoring for properties in holiday destinations and if you take your property off the market for a personal vacation, you may lose out on the financial gains.
As mentioned earlier, a vacation property is a great investment. However, to make it work, you need to be prepared.