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How to Own Vacation Property

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Vacation homes are priced well below national property trends. As investment properties, the future of vacation homes is uncertain. But with prices this low, there’s never been a better time to buy vacation homes for personal use.

Of course, even a cheap vacation property is a massive investment. There’s a good reason to be cautious about buying one. But you shouldn’t let apprehension stop you from owning the summer home of your dreams.

Want a vacation property, but not sure where to start? This guide will help you gauge your finances and help you with the homebuying process.

1. Check the Budget

For many, it’s a struggle to afford a single home. Purchasing vacation real estate can effectively double your current mortgage payments. And if you dream about using it as an investment property, laws and lenders can make that option prohibitively expensive.

Can you afford a vacation home? That depends on your finances. In general, it’s not advised to buy a vacation property unless you paid off your current home, saved for retirement, and have the liquid cash.

For some, even this situation would not be ideal if you’re contending with student loans or high credit card debt.

Want to know how to afford a vacation home when your budget isn’t ready for it? There’s a simple alternative.

Consider a timeshare. Although this term has garnered a negative connotation, it’s a wise way to enjoy a vacation property without a large investment. A timeshare is a property with divided ownership, and each owner can use the property for a certain amount of time each year.

Since ownership is divided, you pay only a fraction of the vacation home’s actual cost. Check out this article for more information about buying a timeshare.

2. Know the Law

If you were planning on renting out the vacation home, think again. Let’s say you use your vacation home for a generous period of one month. That means a renter will occupy the property for eleven months.

You’ll have to pay taxes on those rental payments. When you rent your home for more than 14 days a year, the IRS wants to know about it. Renting also comes with a legal obligation to ensure certain housing standards, which can be difficult when you live several states away.

And depending on how you buy the home, renting isn’t even an option. If you get a loan for a second home, your lender won’t let you rent it out. Once you start renting for more than 14 days, it’s technically an investment property.


Loans for investment properties are different. They have higher interest rates and require larger down payments at around 30%.

Figure out how you plan on owning the home and see how that affects your overall budget and tax situation.

3. Test a Vacation Property

Know where you want to buy your vacation home? Maybe you’ve always dreamed of living on beachfront property. As you know, dreams and reality do not always see eye to eye.

Once you’ve decided on a neighborhood, you should test it out first. Online statistics and Google maps do not tell the whole story.

When your next vacation comes around, find a rental home in the potential neighborhood. You should stay for several weeks — maybe even a month. During your stay, you’ll get a good idea of the overall atmosphere, prices, and safety.

Failing to take this preventative step could end with you buying a $300,000 vacation property in an area you don’t want to visit.

4. Talk to a Local Realtor

Once you’ve found your dream home and neighborhood, you’re ready to make an offer. But do you know how to buy a vacation home? The logistics are complicated when you live thousands of miles away.

But the solution is simple.

Contact a local realtor to help you with the transaction. They’ll navigate the web of local and interstate tax codes. Plus, they are experts in the local housing market and can work out a better offer.

This is your opportunity to ask about any laws concerning rental homes, should you be considering that option.

Be sure you do your research before choosing a local real estate agent. You want a great agent who can warn you of potential hookups before it’s too late.

5. Maintain Your Vacation Property

Once you own a vacation property, you need to worry about maintaining it. You’ll only be there for a few weeks a year. So how do you keep it safe and protected while you’re gone?


You’ll need a property manager. If you’re able to rent the vacation home, the manager will ensure everything stays up to snuff. But they’ll also inspect vacant homes to look for signs of break-ins and ensure nothing has sprung a leak.

In addition to a property manager, consider a security system. Burglars target empty, vacant vacation homes because they don’t have to worry about being caught. A security system can be a powerful deterrent to make them think twice.

Many of these systems now come with online connectivity. You can watch the cameras in real time and rest assured your vacation home is safe and sound.

Make Your Dream Home a Reality

With the help of a local agent, buying a vacation property is as easy as buying a home anywhere else. You can still have a personal getaway even when your finances aren’t in order. Turn to a timeshare or rental homes for cheaper, no-fuss alternatives.

Want to know more about buying properties? Check out the “Buy” category on our blog.