3 Must-Ask Questions For Your Agent When Buying A Vacation Home
Posted on: 2 July 2020
You've worked hard, you've saved up some money, and now you're ready to buy a vacation home. A vacation home can serve as the ultimate getaway from the stresses of everyday life, providing you and your family with a comfortable place to stay at the destination of your choice. Of course, a vacation property is a major investment, and not one that should be taken lightly. With this in mind, there are a few questions you'll want to ask your real estate agent as you begin looking at properties.
What's the Potential Rental Income on This Property?
Many owners of vacation homes choose to rent them out when they're not planning on using them; this can be a great source of additional income and can help to offset your monthly mortgage on the property. In fact, in the United States alone, 30% of vacation homeowners rented them out for additional income in 2018 alone.
If this is something you're considering, you'll want to speak candidly with your real estate agent about how much rent you can expect to collect from any given property. He or she should be able to do some research on similar local properties and come up with a fair market value for short-term rentals. Keep in mind, of course, that rates may fluctuate by season--especially if you're looking to buy in an area that sees peak tourism during specific months of the year.
Will I Need to Purchase Any Special Insurance Coverage?
A vacation home, just like your primary residence, will need some basic home insurance coverage. However, depending on where you're buying, additional coverage may be highly recommended or even required by your lender. A vacation home in a known floodplain, for example, may require a flood insurance rider to be added to your traditional coverage. And if you'll be renting out your home for income, you might need additional liability coverage for your peace of mind.
What Kind of HOA Fees or Other Expenses Will I Incur?
In addition to the mortgage on your vacation home, you might also have HOA fees or similar expenses to cover. Make sure you find out about these from your real estate agent before you make an offer. You might even want to inquire with the current owners as to what their average utility bills are so you can plan accordingly and make sure a home is truly within your comfortable budget.
Keep these questions in mind when looking for vacation homes for sale.
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