Considering A Vacation Home?

If you are the sort of person who likes to go on vacation to the same resort every year, think about buying a vacation home there. When deciding if you can afford to buy a 2^nd home, factor in the money you currently spend on hotel bills or on renting a cabin or cottage.

Picking Your Place

Do you want to be able to use your 2^nd home for weekends as well? Make sure it's not more than 2 or 3 hours drive from where you live, otherwise you just won't use it. If you pick a remote but cheap cabin, it will not only be harder to get to but harder to resell. On the other hand choosing a lakeside cottage in a vacation resort will command a premium price. If you live in a cold area, you may prefer to buy a cottage in a location that is warm and sunny the whole year. Remember though you will have added flight expenses to get there and will be unlikely to use it as a weekend getaway.

Generating Income

Many 2^nd home owners earn income by renting out their vacation property part of the year so that their vacation home pays itself! The downside of doing this is that you won't be able to go there yourself at the most popular times of the year.

Joint Family Purchase

If you have siblings then buying a family vacation home together can make sense. You can not only share the expenses but also share the fun of having a place where you can all get together at holiday times. Before making a final decision to buy, it's important to agree in advance how you will divide the purchase price and the running expenses. This will depend on how much time you want spend with your individual families at the home and how much time you want to spend together. For example, do you all want to be together for Thanksgiving, or will each family take a different national holiday in rotation? Choosing somewhere where everyone has to drive or fly equal distances to get there should mean that no one family would have more advantage. However, if you pick a place that is close to one family, they can use it at the weekends and make sure it is maintained properly. The other families can then have the pick of the summer weeks. As your families grow and mature, this vacation home will be a joint inheritance for 2^nd and 3^rd generation family members, helping to encourage family cohesion in the future.

Buying With Friends

Buying a vacation home with friends is often more problematic because if you fall out with your friends, you may find you lose your vacation home as well as your friendship. However, dividing the cost between three other families will mean that you will have a quarter of the year each to use your second home. This can compare very favorably with the cost of a two or three week time-share, which have a bad reputation, because they often have high hidden maintenance expenses.

Legal And Tax Advice

If you rent out your vacation home you need to consult your accountant since the income you generate is usually subject to tax. When buying with others it is very important to make sure that you get proper legal and tax advice regarding the joint purchase as it can be very complex. Everyone should also sign an agreement regarding use and expenses of the property in advance of purchase to help avoid disputes later.