Vacation Property Walkthrough: Considerations When Choosing a Vacation Property
As with any other real estate purchase, location is the single most important factor when choosing a vacation property. You may already have a specific area in mind when deciding to buy – or be able to choose among several attractive locations. Take the time to choose carefully: A home in a poorly chosen location negatively affects the vacationer (who won't enjoy it), the investor (who can't rent or resell it) and the future retiree (who may have to sell and find another home). (See also: The 5 Factors of a ‘Good’ Location.)
If possible, try to spend some time in the area during different seasons. For instance, if you’ve enjoyed spending summer vacations at a particular beach, try a winter vacation in the same spot to see what it's like year-round. This is especially important if you plan to use the home as your primary residence during retirement. Visiting the area during the off season can provide insight regarding the true local flavor – and what to expect when all the tourists are gone.
Feeling adventurous? If you enjoy international travel, you can think globally when it comes to choosing a vacation property – and take advantage of a beautiful setting, perfect climate, low cost of living and low property taxes. Some of the world's most affordable housing markets aren’t in the U.S., but are still relatively close to home. If you’ve enjoyed spending time in the Caribbean or Central America, for example, you could explore the region’s many vacation property opportunities – and still be just a few hours’ flight from home.
If you’re going to use the vacation home as a weekend getaway, an overseas destination may not be practical unless you are close to an international airport and the home is just a short flight away – and a short (easy) drive once you get there. Otherwise, international vacation homes are better suited for buyers who can make extended trips or who plan on using the home as a primary residence during retirement. (For more, see: The Best Places Abroad to Buy a Second Home.)
While a home on a secluded island may sound like the perfect retreat, you’ll use a vacation home more if it’s relatively easy to access. Here’s something else to keep in mind: If you’re concerned with both convenience and resale value, vacation properties located within three hours of a major metropolitan area tend to fare the best.
It’s important to pay attention to the actual travel time – not just "how the crow flies" on a map. Some vacation spots are close to metropolitan areas in miles, but take an unexpectedly long time to get to because of the type of road (think: winding mountain roads), road conditions (washed-out dirt roads) or limited ferry schedules. Also, consider how close you are to airports (coming and going) if air travel will be your primary means of getting to and from the vacation property. And, of course, research how often planes flies to your location.
If you plan to use the home as a primary residence in the future, think about how close you are to conveniences and services. For example, as a vacationer, you may not mind spending 45 minutes to get to the grocery store – but that drive could get old quickly if you’re a full-time resident. Access to quality healthcare, car mechanics, social opportunities and the like are other important factors when deciding where to buy.
Types of Vacation Properties
The type of vacation property is another important consideration. A vacation property may be a single-family home, a condominium unit, a townhouse or a fractional ownership (discussed in the "Fractional Ownership" section of this tutorial). Each type of home has advantages and disadvantages, and choosing is a matter of personal and financial preferences. A single-family home, for example, will have different costs and demands than a condominium unit or townhouse. (See also: The Complete Guide to Buying a Condo.)
Condos are popular vacation properties because you aren’t responsible for any of the maintenance outside of your individual unit. Lawn care, exterior painting, pool cleaning and garbage removal are all handled by the condominium association. Of course, you pay a monthly or annual HOA fee for these services – but it can be worth the cost, especially if you’ll be absent much of the time.
Single-family homes entail more maintenance responsibilities, but you may be willing to shoulder these responsibilities in exchange for the increased privacy. Sometimes, where you want to buy dictates the prevailing property type and style. For example, many vacation homes in rural mountain and lake communities are cozy log cabins, while beachfront areas tend to have lots of condos.
Area Features and Attractions
Many people buy vacation homes to be close to a feature they love – whether that's the beach, a lake or a ski resort. If the vacation home's primary purpose will be to serve as a family getaway, ideally it will be located somewhere you and your family will look forward to spending time, year after year.
In addition to the geographic features of the area, you may also want to consider tourist attractions and community offerings. Will there be enough activities to keep the kids busy (besides the internet – and how good is the internet coverage)? What’s there to do on rainy days? Does the community offer a variety of opportunities for retirees? Are there nearby libraries, amusement parks, fishing piers, golf courses, mountain-bike trails or other attractions your family or renters would enjoy? Is the healthcare system adequate? (See also: 12 Questions to Ask Before Buying a Vacation Home.)
When making buying decisions, consider your long-term plans for the property. If you’ll keep the home for many years or into retirement, it should be able to meet both your current and future needs. Will the property be used for large family gatherings, perhaps with grandkids in the future? If so, look for properties with more bedrooms and baths than are needed now to make sure the property offers expansion potential. Is the property centrally located for all family members?
If you plan to pass on the property to future generations, do the kids enjoy the property – and will they continue to do so in the future? Will the kids be able to keep up with the expenses and maintenance? Asking these questions now – before making a purchase – helps ensure you find the most appropriate vacation home for now and in the future.
Vacation home buyers may have the flexibility to "time" a purchase and take advantage of favorable market trends. Following the Great Recession, for example, many markets were flooded with inventory and as a result, home values dropped considerably. However, certain "buyers' markets" may come with hidden consequences; it could be years or even decades before home values recover in the most hard-hit areas.
Buyers who are in it for the long haul may be less affected by this than those looking for a short-term vacation opportunity. Real estate search websites like Trulia.com and Realtor.com maintain current market trend and statistical data for specific areas. You can find summaries that include median sales prices, the number of sales, average listing price, number of listings, average price per square foot, and area crime and community information.Vacation Property Walkthrough: Timeshares and Fractional Ownership