The purchase of vacation rentals was up over 50% last year, and is expected to continue increasing this year. If you are among the millions of Americans deciding if investing in a vacation home, whether for personal use or short term rental, is right for you, we are here to help. We have highlighted of list of factors to consider below, and we are ready to answer any of your questions about investing in real estate when the time is right.
Pros and Cons of a Vacation Home
As with any major financial decision, it often helps to weight the pros and cons. When it comes to buying a vacation home or investment property, here are some of the pros and cons:
Pros
- Most real estate will increase in value over time, making some of your vacation funds a part of your portfolio. This means some level of ROI on what would otherwise go to a hotel or Airbnb owner.
- It’s relatively simple to begin earning money by offering your vacation home as a rental.
- The length of your vacations will no longer be determined by the cost of accommodations. If you have the flexibility to work remotely, you can extend your trip to the vacation home even longer without paying more!
- Many people who own a vacation home say it boosts their quality of life, with predictable vacation accommodations that are already tailored to personal preference.
Cons
- It can be expensive. While you can expect to make money from your vacation home investment, it will also cost to purchase and maintain the home, including furnishing, repairs, and ongoing HOA fees or taxes.
- The cost of a vacation home sometimes takes away from other savings. Make sure you won’t have to sacrifice other important things like retirement, emergency funds, or college savings.
- There may be less flexibility to travel to new locations. If you know you like to try something new on each vacation, buying a vacation home that you will return to year after year may not suit your personality and personal preferences.
Additional: Pros and Cons of Living in a Tourist Town All Year
Where to Buy a Vacation Home
There are plenty of good choices for a vacation home location. While we can’t tell you exactly where you should buy, we can tell you three factors to keep in mind as you consider different locations.
Personal Use
If you plan to purchase a vacation home for mixed use (i.e. some rental income and some personal use), then you should first decide where you would like to vacation regularly. For example, if you know you love the ocean and always yearn for a beach vacation, buying a mountain cabin isn’t the right choice for you no matter how lucrative the property may be. Before anything else, decide what you are looking for in a vacation home, including the location, style, size, and local attractions.
Local Rental Market
After determining the type of vacation home you want, next you should research the local rental markets of some potential locations. If your plan is to offset the cost of your investment by offering it as a rental, be sure there is a demand for the type of property you want in the location you are considering. With a little time searching online, you can accurately estimate potential income for a property to help you formulate a plan.
Affordability
After considering the rental market and your personal preferences, narrow down your search by considering the affordability of different communities in your target area. This is a great time to speak with a professional who knows the area well. Let them know how much you are planning to spend and what your wish list is. We can save you lots of time by sharing our expertise!
To get started on your search for a Panama City Beach vacation home, contact us today!
