Last summer I wrote an article on the benefits of renting a vacation property. After receiving some thoughtful reader feedback on that post I wanted to list some of the benefits of buying a vacation property as well.
Appreciating Asset: With the recent decline in home prices, now may be the perfect opportunity to pick up a second home at a substantial discount. Many economists believe home prices have stabilized and expect to see a modest recovery in prices over the next few years. On the other hand there is always the potential these homes will decline in value as well.
Potential Rental Income: As I mentioned in a previous article, there are plenty of people willing to rent your little piece of heaven on a daily, weekly, monthly, or even seasonal basis.
There are many great websites were you can list your property for rent. Two of the most popular sites for vacation properties are http://www.cyberrentals.comand Craigslist. If you are considering the purchase of a vacation property to rent, check these sites for the going rates of similar properties in your area.
Renting the property may be a great way to supplement the expense of owning a second home. Even if you pay cash for the vacation property, you’ll still have property taxes, maintenance costs, utility bills, and association fees to pay.
Renting isn’t for everyone, and if you live far away from your rental property you’ll probably need to enlist the services of a competent property manager to clean, maintain, and book the property in your absence.
Sense of Community: Owning your own vacation home connects you with the local community in a way that renting cannot. Lifelong friends are often made with neighbors, and you see the area (for better or worse) from a different perspective.
Family Legacy/Traditions: In many families, trips to the lake house, hunting camp, or ski condo have evolved into important family traditions. Properties have been handed down from one generation to the next with each one creating new memories along the way.
Many second home owners enjoy the piece of mind knowing they don’t have to worry about the “availability” of their vacation property. They simply hop in their cars, ATVs, boats, or planes and go!
Potential Tax Benefits: As I’ve mentioned before, I’m not a big fan of buying something just to get a “tax break”. In most circumstances you can deduct the mortgage interest on second home and vacation properties, but I would consider this a “bonus” and not a “reason” to buy a vacation property.
There are also limitations on how much interest you can deduct if the home is rented out more than a few days out of the year. Be sure to speak with a certified tax professional (of which I am not) when considering the tax advantages or disadvantages of purchasing a vacation property.
