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Vacation Homes: How to Get the Most for Your Money
With the economic slump taking a serious bite out of vacation plans for the past few years, the idea of turning a legitimate profit off your vacation home is a little more far-fetched than it once was, but there remains a blueprint for success if you put your chips in the right places. The bottom line is that the median price of vacation homes fell 23% between 2007 and 2008; it will require a great deal of effort to turn a profit despite the fact that there will likely be an increase in vacations in the next year.
How to Make Money off Your Second Home
Yes, it's a difficult time to think about purchasing a second home, but there is a market for it. And if you're in a position where you need to be making a bit of money off your vacation home - whether it be for paying off the mortgage or just because you understand the benefits of renting our a place you don't live in full-time - you'll need to weigh an extra set of considerations before you make a purchase.
One of the most important aspects of purchasing your vacation home is that you'll want to be familiar with the area. Don't just make one trip to the town you want to purchase your home in and consider yourself an expert. The best situation for a vacation homeowner is for he or she to have a working knowledge of the town, community, or area, and to be able to market their house accordingly.
In that respect, if you want to take your rental business seriously, you'll want to purchase a home in an area that gets a fair amount of attention. Even if you're the kind of person who wants to vacation in the middle of nowhere, it's important to recognize that most people want to be in places a little bit closer to civilization than that. Remember that this is a business decision, so go where the market is.
Additionally, you'll want to know a fair deal about the market in the area where you choose to make a second home purchase. Every area has different property values, and you'll need to base your rental feels on that fact. Don't just assume that because one area has a certain property value that a similar area (another beach) will have the same economy. Since you likely won't live in the same town as your vacation home, it may be best to hire a rental team, a group that will take care of monetizing your home while you're not around. That way, you'll be able to stay in line with property values and stay current with the market without doing much of the grunt work yourself. Remember, though, that these rental agencies need to make money, too. They do that by taking a lump sum off your bottom line.
Finally, one of the most important things when it comes to monetizing your home is that you need to be marketing the home all over the place. It's not enough to simply market the home with your friends and acquaintances in your hometown. There is a solid potential for some serious money to be made through the renting process, and you should do nothing to limit yourself. Work with real estate agents all over the country to increase your chances of keeping the house regularly rented.
Quick Facts on Renting a Home
Keep these tips in mind when you first implement your rental strategy.
- Because of the average cost of a monthly mortgage payment in relation to the average week's rental income during peak season, you'll need to rent out your vacation home 15-17 weeks in order to turn a profit. Remember that this means you won't really be able to use the home during peak season.
- Keep the home value up! It's easy to neglect a home that you don't see very often, but with all the people coming in and out of the house on rentals, it will be important for you to make sure it retains its value.
- Use the Web! Internet listings allow for you to reach the broadest customer base possible. Don't settle for simple local listings anymore.
- Keep a level head when it comes to property taxes. Some vacation areas have raised property taxes a great deal, making the extra payment a pretty big annoyance, but you've got to remember that sometimes the legal fees associated with appealing said taxes can be more burdensome than dealing with the government mandated tax.