Four reasons why you should buy a vacation home
When you buy a vacation home, you’re making one of the few investments that offers both personal and financial rewards. And you don’t have to be a real estate tycoon to pull it off.
Buy a vacation home to live on your terms
Buying a vacation home allows you to diversify your income, build wealth, plan for retirement, and, of course, take a vacation at no extra cost to you. Some investors weigh one benefit more heavily than the others, but once you’re clear on why you want to buy a vacation home, you can focus your search and match your investment with your priorities.
1. Diversify your income
When you buy a vacation home and choose to rent it out, it’s possible to create a new, short-term rental revenue stream. This income could supplement your salary and any other interest-bearing income you earn.
While optimizing this income isn’t rocket science, it is vacation rental real estate science. You want to work with an agent who has the expertise and vacation rental savvy to help you buy a vacation home with a good cap rate in a great market.
2. Build equity and wealth
When you buy a vacation home, you join a community of savvy investors who understand the value of real estate holdings. Your property can be an investment or a legacy you leave for your family.
But, when you buy a vacation home, you don’t have to pay cash (or cash in your savings). Nearly 75% of people who buy a vacation home will invest through some form of financing. Then, by hosting short-term rental guests, the mortgage, property taxes and home maintenance costs are offset—all while you build wealth for today and tomorrow.
3. Plan for retirement
Retirement may be a few years (or decades) off, but buying a vacation home now opens up interesting options for you. Do you want to retire at the beach, by the lake, in the mountains, or even in your favorite urban oasis? Is it your dream to host your children and grandchildren in a vacation home for holidays and other special visits?
As you move closer to retirement, the amount you owe on your vacation home mortgage will be smaller, or it may be paid off completely. Meanwhile, with the right property management team looking after things, your home will be well taken care of until it’s time for you to retire there.
4. Take easy, affordable vacations
If you want to buy a vacation home to enjoy more downtime, join the bevy of buyers making a vacation rental investment within a two- to four-hour drive from their primary residence. If it’s a quick jaunt for you, and it’s easy to block out time to entertain or unwind, you may never want to vacation anywhere else again.
After all, if you want to go to your vacation home to relax, chances are paying guests will want to, too—especially if you buy a home that’s easy on the eyes and pet-friendly.