Vacation Property Walkthrough: Reasons To Purchase Vacation Property
AAA
  1. Vacation Property Walkthrough: Introduction
  2. Vacation Property Walkthrough: Reasons To Purchase Vacation Property
  3. Vacation Property Walkthrough: Considerations When Choosing A Vacation Property
  4. Vacation Property Walkthrough: Timeshares And Fractional Ownership
  5. Vacation Property Walkthrough: Financing A Vacation Property
  6. Vacation Property Walkthrough: International Vacation Properties
  7. Vacation Property Walkthrough: Maintaining A Vacation Home
  8. Vacation Property Walkthrough: Renting Out A Vacation Home
  9. Vacation Property Walkthrough: Selling A Vacation Property
  10. Vacation Property Walkthrough: Conclusion
Vacation Property Walkthrough: Reasons To Purchase Vacation Property

Vacation Property Walkthrough: Reasons To Purchase Vacation Property

The National Association of Realtors (NAR) 2011 Investment and Vacation Home Buyers Survey indicates that the typical vacation-home buyer in 2010 was 49 years old, had a median household income of $99,500 and bought a property that was a median distance of 375 miles from his or her primary residence. Those who purchased the property for investment purposes (rather than as a family retreat) had a median age of 45, earned $87,600 and purchased a home that was a median distance of 19 miles from their primary residences. Regardless of age or income, people purchase vacation properties for a variety of personal and financial reasons.

Vacation Property or Family Retreat
Many vacation property buyers are interested in having the home primarily for vacations and family retreats. The NAR survey indicated that "Vacation home buyers want the property for their own personal use, with 84%(of survey respondents) saying the primary reason for buying was to use for vacations or as a family retreat."

A vacation home can be particularly appealing to people who tend to visit the same location year after year. Owning a vacation property - rather than renting - can provide many perks including:

  • The ability to customize the property based on the owner's preferences
  • The convenience of having personal items in place, such as linens, toys and bicycles
  • The comfort of knowing what to expect when on vacation
  • The flexibility of using the property at any time
Principal Residence in the Future
The purchase of a vacation home is often made with the expectation that it will become a primary residence in the future. People who frequently vacation in one area may dream of living there during retirement. The NAR survey showed that 34%of vacation home buyers said they plan to use the property as a primary residence in the future.

While it is impossible to predict future home values, some buyers may wish to purchase a vacation home now to lock in a retirement home for later at current prices. In addition to looking forward to using the property as a primary residence in the future, it can provide years of vacation enjoyment.

For a Family Member, Friend or Relative
It is not uncommon for individuals to purchase second homes for children, aging parents, relatives and friends. According to the NAR survey 14%of vacation home buyers purchased the property for a family member, friend or relative to use. Some of the buyers purchase a home for their child or children to live in while attending college. This provides the kids with a comfortable place to spend their college years, and a place for family and friends to stay when visiting. When the children graduate, the property turns into a full-time vacation home.

To Rent to Others
The primary purpose for some vacation property buyers is to rent the property to others in order to generate income or offset the costs of the purchase. The vacation property could be on a year-round rental program or rented out only during prime vacation periods, such as summers (for beachfront properties), winters (for ski towns) and the winter holiday season. The tax implications of using a second home as a rental property are complicated, and we will be briefly discussing them in the "Renting out a Vacation Home" section of this tutorial.

To Diversify Investments
Other vacation home buyers may be interested in using the property as an investment. The buyer may have money saved and be looking for diversification. While there was a time when real estate was considered a relatively low-risk investment (based on the fact that properties had generally appreciated over time), modern real estate markets make no guarantees regarding the future values of properties. Buyers should thoroughly research market and sales trends prior to making a decision to purchase the property as an investment. One should never assume that the investment is a "sure thing."

Vacation Property Walkthrough: Considerations When Choosing A Vacation Property

  1. Vacation Property Walkthrough: Introduction
  2. Vacation Property Walkthrough: Reasons To Purchase Vacation Property
  3. Vacation Property Walkthrough: Considerations When Choosing A Vacation Property
  4. Vacation Property Walkthrough: Timeshares And Fractional Ownership
  5. Vacation Property Walkthrough: Financing A Vacation Property
  6. Vacation Property Walkthrough: International Vacation Properties
  7. Vacation Property Walkthrough: Maintaining A Vacation Home
  8. Vacation Property Walkthrough: Renting Out A Vacation Home
  9. Vacation Property Walkthrough: Selling A Vacation Property
  10. Vacation Property Walkthrough: Conclusion
Vacation Property Walkthrough: Reasons To Purchase Vacation Property
RELATED TERMS
  1. Commercial Real Estate Loan

    definition of a commercial real estate loan
  2. Accessory Dwelling Unit (ADU)

    A legal and regulatory term for a secondary house or apartment ...
  3. No-Appraisal Refinancing

    A type of mortgage for which the lender does not require an independent, ...
  4. No-Appraisal Loan

    A mortgage that does not require an appraisal of the property’s ...
  5. FHA Streamline Refinance

    A mortgage-refinancing option offered by the Federal Housing ...
  6. USDA Rural Refinance Pilot Program

    A mortgage-refinancing option offered in some states and territories ...
  1. How do I check the balance on my prepaid credit card?

    Check your prepaid credit card balance quickly using your phone or the Internet. Keeping track of your balance is easy and ...
  2. Is a home equity loan a good way to pay off my credit card debt?

    Learn about the characteristics of a home equity loan and how it can be used to help you pay off your outstanding credit ...
  3. What are the differences between a home equity line of credit (HELOC) and a home ...

    Learn the differences between a home equity loan and a home equity line of credit, and find out how to select the one that ...
  4. What are some examples of a good time to take out a home equity line of credit (HELOC)?

    Determine if a home equity line of credit (HELOC) is right for you by looking into the most common and ideal uses of these ...
Related Tutorials
  1. The Complete Guide To Planning A Yearly Budget
    Budgeting

    The Complete Guide To Planning A Yearly Budget

  2. The Complete Guide To Retirement Planning For 40-Somethings
    Budgeting

    The Complete Guide To Retirement Planning For 40-Somethings

  3. The Complete Guide To Retirement Planning For 30-Somethings
    Taxes

    The Complete Guide To Retirement Planning For 30-Somethings

  4. Homebuyers' Walkthrough
    Home & Auto

    Homebuyers' Walkthrough

  5. The Complete Guide To Real Estate Renting
    Home & Auto

    The Complete Guide To Real Estate Renting

Trading Center