Research shows that the market for vacation homes is booming these days, especially in the wake of the pandemic. Research shows that vacation home sales rose by 16% in 2020, and with more people working from home than ever, the idea of a second home is pretty appealing.
In other words, if you’re considering splurging on a vacation property, you’re far from alone!
It’s worth noting, of course, that buying a vacation home, condo, or timeshare isn’t for everyone—even if the dream of frequent travel is a thrill. If you’re on the fence, here’s how to tell when it’s time to buy, and when you should reconsider saving for that second mortgage.
When It’s Worth Buying a Vacation Property
For the right owner, there are plenty of key benefits of a vacation home that can make these properties well worth the investment. Here are two main reasons you might consider owning a vacation home.
When You Consider It an Investment
Homeownership is a good investment in general, and in an ideal world, your vacation house will increase in value over time. Even better, you’ll be able to rent out your property when you aren’t using it to create a passive income stream.
When You Take Frequent Vacations to One Location
If you consider yourself a beach bum or you love hiking in the mountains near your favorite getaway, buying a vacation home might make sense. Having a property in an area you love can help you save money on the vacations you would normally be taking.
When Not to Buy a Vacation Property
When you’re scrolling through popular vacation home sites, it can be tempting to get sucked into the excitement of vacation travel. However, there are a few red flags that suggest you’re not ready to own a second property.
When You Can’t Afford It
This first one might sound obvious, but it’s not always easy to make the right call if you’re blinded by the dream of owning a vacation home. Calculate the total cost of your investment, including the mortgage, maintenance fees, and other related costs, before taking the plunge.
When You Like Variety in Your Vacations
If you like the excitement of sleeping in a different resort, hotel, or rental property every time you’re on vacation, buying a single property may not be ideal. Instead, consider getting a vacation club membership.
When Someone Else Calls the Shots
If you own a vacation home, you can choose when you visit, rent out the property for extra income throughout the year, and sell whenever you choose.
However, for other vacation properties—especially timeshares—this won’t be the case. Worse, the steps to exit a timeshare are notoriously convoluted, and you may need help getting out from under your contract.
When You’re a Workaholic
If you can’t imagine yourself taking time off work more than once a year, purchasing a vacation home won’t make financial sense. Do an inventory of your vacations over the past few years to come up with a better sense of how much time you tend to take off work.
Be Realistic About Your Vacation Property Plans
Taking some time to consider your lifestyle, finances, and travel inclinations is the best way to decide whether a vacation property is best for you. While this investment isn’t one you should jump into lightly, it can be a fantastic deal for the right person.
As you consider your next steps, don’t forget to take a look at our other content. We post plenty of real estate and personal finance guides to help you make crucial decisions like this one!