Are Summer Homes Worth the Hassle?
Are summer homes worth
the hassle? Maximum
Exposure Real Estate opines, “Buying a vacation home is great for a number
of reasons. Not only does it serve as a great place to spend time away from the
world, but it also works as an excellent investment for you as well.
Noted financial advisor Dave
Ramsey said, “The idea of owning a second home is tempting. You can buy it
near your favorite vacation spot or in your own city. But the truth is, for a
lot of people, the purchase of a second home is a bad idea. Real
estate is riskier than most people realize—and it’s not just
about the money you tie up in your property.
Are Summer Homes
Worth the Hassle?
What are the pros and cons of owning a vacation home?
- A great
place to spend time away from the world. Returning to the same place
time and after time can be comforting as you become familiar and comfortable
with the location. It allows you the freedom to be yourself and the opportunity
to expand long-term friendships with residents – you can become part of the
excellent investment for you. While all assets fluctuate in value in the short
term, vacation properties are more likely to retain their value and appreciate because
they are located in popular areas with a geographically limited supply.
- Rental income. If you decide
to rent your home, but personally use the property as well, you’ll need to
determine whether you’re eligible to deduct operating expenses. To determine
this, add up the days you rented the property. If you occupied the property
fewer than 10% of the days, you rented it or for less than two weeks –
whichever is greater – you can deduct all of the operating expenses of the home
including interest, utilities, cleaning fees, lawn maintenance, and management
- There’s the money. Most people simply aren’t in a position
financially to buy a second home. According to the Census Bureau, two-thirds of
today’s homeowners have a mortgage on their current homes. Jumping the gun and
buying another property before your primary residence is paid off simply
doubles your risk—even if you plan to rent it out when you’re not using it.
- It takes time and hassle. How much time do
you spend on the upkeep of your home? While a second home may not double that
time, it can mean many more hours and headaches than you think. Dave
Ramsey said, “If this is a vacation home that will remain unoccupied
most of the time, just imagine the damage a burst water pipe could cause if it
goes undiscovered for weeks. Your
vacation spot is also an easy target for vandalism and burglary, so you’ll need a
top-notch security system and insurance designed to cover damages that are more
common in vacation homes.
- Same old, same old. If you are
paying a significant amount of money each month for a second home, you may feel
that you need to constantly and exclusively visit the property to justify your
investment. How much time do you have for vacations? Do you want to go every
year to the same place?
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