When relaxing in your favorite vacation destination it can be fun to browse through real estate listings over the morning coffee and dream about making the spot a true home away from home. Low mortgage rates and available real estate bargains make the idea seem even more attractive, and you figure you can offset the cost by renting the home to other vacationers. If you’re headed down this path check out these pros and cons of vacation rental investment properties:
- You can use rental income to help pay for your vacation home. You also don’t have to feel guilty about the home sitting empty when you can’t get there.
- Great income potential over the years. Consider that your mortgage expenses will remain constant (if you select a fixed rate loan) while hopefully the rental prices and value of the property will continue to go up over time.
- Your escape can turn into work. Think through whether you’d prefer to repaint the porch and fix the running toilet during your downtime or pay to have someone else handle the maintenance. If you choose the later check to see how this affects the property’s income potential.
- There may be vacancies. Don’t buy a home if you can only afford it if all peak season weeks are booked. The economic downturn has many families tightening their budgets and vacations are an easy thing to cut out.
- You’ll be sharing your home with others. While most renters will treat your home with respect the property will be well used if full of vacationers every week. Save the white sofas and antiques for your primary residence.
If you are looking at high value properties you may need to consider a non-conforming jumbo financing solution. You can check current jumbo loan rates from multiple mortgage companies using the rate tables on ForTheBestRate.com.
[Related: Tips for Buying a Vacation Home in the State of California]
2 Week Rental Property for Only $500,000 – World’s Most Expensive Rental?
Ok, maybe forget long term rentals. The money is in short term rentals.
Looking for a casual vacation getaway for your family this summer. Does staying in a cottage on Cape Cod or a cabin in the Adirondacks not doing it for you this year. Relax, here’s the fix. Just pack up the minivan and head over to Sandcastle. This quaint 31,000 sq/ft home sitting on a modest 11.5 was reported by Most-Expensive.net as being rented for two weeks for only $500,000. This breaks down to just over $35,000/day. Luckily the home has 11.5 bathrooms so that you can make it to a toilet between the pool, indoor basketball court, tennis courts, bowling alley, movie theater, and half pipe.