Lying on the beach on a hot, sunny day or fishing at the lake on a perfect cool morning, it occurs to you: “I’d like to spend more time here.” That’s the first mental step toward a tentative decision: “Maybe we should buy a vacation home here.”
If thoughts of buying a vacation home survive the drive home and persist into fall, you might be ready to consider buying a vacation house. Many others have had similar dreams. Almost 8 percent of Americans own some form of recreational property.
Florida has the highest number of vacation homes, followed by California, Michigan, Pennsylvania and Texas. The top 10 states where potential buyers look are Florida, California, Texas, Arizona, Colorado, North Carolina, Michigan, Hawaii, New York and Virginia.
Here are some points to consider before you buy a vacation home:
• How often would you use the house? Property within a two- or three-hour drive is more likely to be used on weekends than houses that require five or six hours on the road. If the area is attractive to you for more than one season, that’s also a good sign. Those who just want two weeks at the ocean in summer or two weeks at the ski resort in winter are better off renting.
• How much upkeep is required? You don’t want to spend your leisure time doing a lot of work, so consider what would be required and whether you’re willing to do it or to pay to have it done.
• Will you still like the area five or 10 years from now? Is the vacation house big enough to accommodate family gatherings? Does the area have attractions for young children, teenagers and their friends, college students, retired people? What kind of people buy in the area? Would you be comfortable with them?
If you satisfy yourself that you really want to buy a vacation home, the next question is: Can you afford it? Some families that initially say no later find that the answer is yes. One way to make a property more affordable, especially if it’s near the ocean or in a top ski resort, is to rent it out for part of the year.
It’s a good idea to have enough cash for the first year’s mortgage payments on hand before you buy a vacation home, just in case rentals don’t turn put as anticipated. And if you buy in the fall or winter at a summer resort, you can’t expect any rental income until the following summer.
Another point to realize before buying a vacation home is that mortgage rates are always a little higher on second homes or investment properties because lenders consider such properties riskier.