By Kelly Quigley, REALTOR® Magazine
Investing in a Vacation Home for Pleasure and Profit by James H. Boykin (Thomson South-Western, 2006)
Buy this book from Amazon.com
If you don’t already own a vacation home, you probably hope to someday. In addition to making fun memories, vacation homes also make a smart investment. But buying a vacation home can be much more complicated than buying a primary residence, from choosing the right location to securing financing. This book offers a straightforward guide to all of the steps involved in a vacation home investment. Author James H. Boykin walks you through various ownership strategies, tax implications, preparing a home for rent, and selling it for a profit. The black-and-white photos interspersed throughout the book are a bit too dark and don’t add much for the reader, but chapters are short and information packed, making a good primer for anyone considering a vacation-home purchase.
Tips From the Book:
- Off-season can yield better deals. You may be able to obtain a beach property for less during the spring and summer, and a mountain ski resort property for less in the fall and winter. There will be fewer prospective buyers, and after the peak selling season the owners may be more anxious to sell because they face off-season maintenance and mortgage payments.
- Buy now, build later. In a rising market, it could be a mistake to wait until you can “afford” to buy. Many disappointed prospective vacation-home owners waited until they thought they could comfortably afford a home only to discover they have fallen further behind. To get around this, buy a lot now and build on it later. The lot may be 30 percent to 60 percent of a vacation home’s value, so you cut the initial outlay in half while you enjoy the benefits of an appreciating asset.
- Be realistic about rental income. If you choose to rent out the property, realize that rarely will rental income offset all of the home’s operating expenses. For ski resorts, a core village location gets the best rent, while ocean properties on or within walking distance to the beach command the highest rents. When budgeting, factor in all of the modern amenities that renters want, from DVD players to hot tubs.