When you're ready to buy a vacation home, you'll have a lot of choices and decisions thrown at you, complicating your search. Questions like whether you should use a real estate agent and how much money you should spend on a vacation home will float through your mind at odd times, like while you're making a sandwich or washing your hair. While the vacation home buying process and shopping experience will be a little different for everyone, there are smart practices to consider and potential pitfalls to avoid.
No matter what kind of vacation home you're in the market to purchase:
Do ask your real estate agent about the local school district, even if you don't have children or don't plan to live in the home during the school year. This affects the neighborhood in various ways, as well as the resale value of the home should you ever sell it.
Do consider your finances carefully before shopping for property.
Do interview your potential real estate agent to determine their experience with second and vacation homes--not just primary residences.
Do spend more than one trip to the area viewing potential vacation home locations.
Do think about potential resale value before you buy a vacation home--even if you don't think you'll ever sell it.
Do visit a variety of vacation home options outside your target area--you may be able to save a boatload by buying a home just an extra 15 minutes from tourist spots.
While working with a real estate agent can help guide you passed some of the pitfalls, it's still possible to stumble along the path to owning a vacation home. If you're going to buy a vacation home:
Don't assume your lender will let you include potential rental income when you're qualifying to buy a vacation home.
Don't drain your retirement accounts to purchase your vacation home, especially if you're counting on the same tax breaks you got on the purchase of your first home to offset the tax penalty.
Don't give into your emotions and buy a vacation home before you run all the numbers and are 100-percent certain this is the destination for all your future vacations.
Don't automatically hire the real estate agent who sold you your primary residence, unless he or she has specific knowledge of vacation home sales in your chosen destination.
Above all else, don't buy a vacation home on your very first visit to a destination. Yes, you might believe you're having a once in a lifetime experience in Hilton Head that you'll want to recreate for all the years to come, but this is an emotional response instead of a sound business decision. Before finding a real estate agent to sell you a vacation home, visit the area a few times. Otherwise, you may realize your vacation home isn't in quite as magical--or practical--of a location as you originally thought.