How to Afford a Second Home or Vacation Property

How to buy a vacation home
Thinking about a second or vacation home? Here are some tips.

As a homeowner, you may be considering ways to continue building wealth in real estate. A second home or vacation property can be a great way to do this. Not only would this provide you the opportunity to have somewhere to enjoy some time away from home, but it could also even supplement your income. Throughout South Florida, the popularity of vacation rentals has skyrocketed from their already existing high levels before the pandemic. A big reason for this is due to the fact that many Americans now have the flexibility to work remotely from any location.

The good news for investors is that the purchase of a second home or vacation property is not just limited to cash buyers. There are a variety of financing options for investors to take advantage of as well. We discuss some recommended steps below.

Creating a plan

  • Set your financial goals: As with any investment, it is critical that you set out the goals that you would like to accomplish with the investment.
  • Determine your budget: In addition to figuring out how much of a monthly payment you can afford for the additional property, you should also consult a mortgage broker to better determine which loan program might be best for your situation.
  • Analyze the market for the subject property: As is the case with the purchase of any income property, it is important that you analyze the market to determine what amount the property will likely rent for as a vacation rental. In doing so, you will be better able to determine whether the investment will have a positive return on your investment or not. Or at the very least, whether you will truly be able to afford it. As a best practice, investors should plan for the worst case scenario to ensure that it is still a feasible and affordable investment.

Summary

A second home can be a great investment while also potentially providing a supplemental income. South Florida is certainly a popular location for many Americans to purchase vacation homes. Although managing weekly vacation rentals can be somewhat more time consuming, these rentals typically yield much greater returns than annual rentals. In the event that a property owner does not want to deal with the additional workload, they can opt to rent the property seasonally instead. For example, a beachfront condo in South Florida will demand much higher rent throughout the winter season when the demand from seasonal residents is greatest. If this approach is taken, the unit will likely be available for the property owner’s use during the off-season months. (These tend to be the warmer summer months.) Of course, this can work out great for a family with children still attending grade school since they would be able to use the property during the summer break. Do you have questions about the South Florida market? Contact Natasha today at (561) 352-6932!

At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!

By natasha moore

REALTOR® with Live South Florida Realty, Inc.

Leave a comment

Your email address will not be published.