Every time I go on vacation! Literally, every time I go on vacation I come home and get the searching going.
When I come back from the beach, I’m searching beach properties and boats. Speed boats, center consoles, yachts that I can’t afford. I let my imagination run wild.
When coming back from the country, I’m looking
at farm properties and four wheeler’s, dirt bikes dirt bikes or side by sides. With those come trails running all throughout the property.
Then I go down the rabbit hole of also having it as a hunting property. I don’t really hunt but I have family and friends that do.
With that I can add an orchard to the land which will also feed the deer. A fully stocked pond for fishing of course. Again, I let my mind run with it.
The options are endless with these properties. Do you use it as a second home for you and your family to use? Wait, the kids have endless sports obligations and you’d barely use it.
Ok, do you Airbnb it and use it on the weekends that you’re available and it’s not rented out? Wait, renters aren’t caring for the property like you do and it’s driving you crazy. Sooo, you rent it out completely without any plan to use it personally.
Well, now the numbers really need to make sense because it’s solely an investment.
I run the numbers on all these different options. I’m telling you it never fails. Every time I go on vacation, I get back on a tear searching for my dream second home or vacation property.
One that I can have family and friends visit to make lasting memories. Trying to actually live. The problem is, I never get past the dream phase.
Why?! Because it’s just a dream and never a plan. “If you fail to plan, you plan to fail.”
The Plan
Who:
Who’s going to be using this property? Are you keeping it for yourself to use or are you going to be renting it out? Maybe a mix of both?
This plays big into the budget and location of what you’re going to rent.
If you’re going to rent it out part of the time, then you can probably go a little bit bigger on the budget. However, if you’re going to rent it out you need to take the rentability into consideration.
For example: If it’s a lake house, the houses on the lake rent more often and for higher prices. However, they don’t rent as frequently during the cold weather months. Same thing with beach houses. City properties need to be in a safe location. Ideally with good public transportation. Even better if they’re very walkable.
The ideal setup in my opinion is a lake house that close to ski mountain. Year-round rental option baby!
Whichever property you’re going with, you’ll want to plan on who will be using the property.
What
Ok, what do you want from your vacation home? Are you loA party-like atmosphere that’s close to night life?
Are you looking for outdoor sporting and activities?
This will help you determine what type of property you’re going for.
City life, lake life, beach bum, mountain living or farm life. They’re all very different and offer different things.
City Life
A condo or house in the city obviously gives you access to restaurants, bars, night-life, arts, walkability, etc. It also gives you the ability to rent it out at all times of the year.
Finding people to turn the property over in between renters may also be easier. That gives you the ability to potentially Airbnb the property if local laws allow.
Pros:
- Appreciation
- Public transportation
- Rentability
- Nightlife, arts, restaurants, plenty to do
- Walkability
- Good internet
Cons:
- High Cost
- Noisy
- Crime
- Parking
Lake Life
This screams outdoor activities. Boating, fishing, water skiing, wake boarding and swimming.
Now you also have to consider on the lake or close proximity? Do you need a deeded boat slip or just a community slip? Do you want the lake access with a beach?
What about a boat house? Wait, a boat house! Does that mean you need to also buy a boat? Do the people who rent the house get access to the boat? What are the liabilities there?
Pros:
- Get outside!
- They generally hold their value.
- Plenty of activities.
- Look at the views!
- Friends and family generally want to visit with you.
- Quiet
Cons:
- High cost
- High maintenance
- Higher insurance
- Potentially bad connection (this could be a pro)
- Seasonal rentability / unless you’re close to a ski mountain.
Beach Life
This is another one for some outdoor activities. All the same things that lake life offers.
Depending on the beach, you can also get some restaurants and nightlife mixed in. It’s nice to have other options besides the beach. Boat to restaurants, putt-putt golf, go-karts, or maybe a boardwalk.
Do you want to be on the beach? On the beach
in a house or condo? Maybe on bay side or sound side. Do you get a boat slip? Here we go with the boat slip again! Do you need another boat?
Pros:
- Get outside!
- It’s proven that people who live by the water are happier. I don’t know who proved it but I read it and it sounds right.
- Get some vitamin D!
- It’s pretty easy to find family and friends that want to come to your beach house.
- Plenty of activities.
Cons:
- Salt is hard on the property.
- Sand, sand, everywhere is sand. Constant cleanup.
- Property insurance.
- High cost
- Seasonal rentability
Mountain Life
This screams outdoor living. A mountain house could be just a house in the mountains.
Close to a large creak, river, lake or ski resort. Ideally all of the above.
Pros:
- A lot of activities.
- Privacy
- Look at the views!
- Nature and wildlife
Cons:
- It might be hard to build on.
- Difficult to access.
- Proximity to nightlife or just a grocery store
- Well water and septic / can consider this a pro
Where
A big part of the decision of “What” type of property is your proximity to them. Everyone has their threshold for how far they’re willing to drive but the bottom line is, the closer you are, the more you’ll utilize the property.
There’s a big difference in one hour and five hours.
I live just outside of DC. A one-hour drive is nothing. Five hours is a trip that needs planning. That’s five hours there, five hours back.
You need to find your threshold for how far you’re willing to go. I think my mark is three hours. Anything more than three hours and I’m not going to use it regularly. The closer to one hour we get, the more I’ll use it.
When
This is a tricky one. When does it make the most sense to buy this property? Well, my general rule of thumb for real estate is buy and wait, don’t wait to buy. However, it’s a little different with a vacation property.
For me, I’m really buying the property to live and make memories more than an absolute investment. So, the sooner I get the property the better.
However, when my kids were little, we couldn’t even enjoy a vacation property. They were too young to do anything and being anywhere but home with our creature comforts was work. Now they’re at ages where they can get out and do stuff.
However, they also have sports. Multiple sports which take up our weekends. Swimming, baseball, soccer, gymnastics, dance and the list keeps growing. For the most part this runs all year long.
We get a break starting in mid-June that lasts until September. So, we at least have the majority of the summer. But have you heard about travel sports schedules? We’re not there yet but if we get there the summer would be GONE.
Everyone is going to have different set-ups with their family schedules but this is something that you definitely want to take into account. This blends in the with, “Who”. Maybe you’ll rent it out the days that you can’t be there.
Why
You have to figure out the root of why you want a vacation property.
Do you think you’ll use it a lot and create the memories with loved ones? Do you like the idea of saying you own a vacation property? Are you keeping up with the Jones’? Are you trying to make money on the property?
There’s a lot of reasons to own a vacation property. You have to figure out why you want one. Also, you’ll want to be able to pivot.
You may not use it as much as you thought. In that case you may want to rent it out to break even or make money. Or sell it. You want to make sure it’s something that you can move quickly if needed.
At this point, you have the property type and location nailed down. Now it’s time to start looking.
Find a Good Realtor
The value that a good realtor can provide is immeasurable. You’ll want someone who sells a high volume of properties in that area.
This will most likely mean that they have strong market knowledge. Places you want to be, places you don’t want to be, what you want in a vacation rental, what you don’t want in your vacation rental and so much more.
They can put you in touch with a good property manager. Which, trust me, they are hard to find and you need not only a good property manager, but a “great” property manager. They have cleaners, handymen and other contractors that they can recommend. That are proven.
They might even have access to properties before they come on the market. This gives you the chance to see it before anyone else.
Find a Good Lender
I’m not just talking about a good lender in that state. I’m talking about a good local lender.
If it’s a small local bank, they may provide lending options that lenders outside of that area won’t offer. A local lender can also play a factor when it comes to the appraisal. Not in raising the appraisal value but just getting it done in the time that you need. Trust me, I’ve seen this first hand.
Research Local Airbnb Regulations
Every area is different on the regulations that they have for airbnb’s. Some don’t allow them at all.
Even if they allow them now, make sure your numbers work if their laws change. The last thing you want to happen is buying the property with the sole purpose of renting it out via Airbnb and then that’s not an option. What’s the exit strategy then?
Conclusion
Outline your plan and get started. Without the plan, you’ll be dreaming your life away. Good luck!
