Have you been in the market to purchase a second home that is a bit on the luxurious side, but you're not sure if you can afford it? You may actually be able to profit off your second home if you rent it out when it is not in use. Follow these two tips about making a return on your investment with a luxurious vacation home.
Consider Every Potential Cost
The cost of owning a second home is more than just the monthly mortgage payment. You should also consider the cost of having homeowners insurance, since it will cost more than the standard insurance that you use to for your primary home. Rental homes frequently have people coming and going, which puts the house at a higher risk of something happening to it, like a fire or theft.
Property taxes on a second home will be higher, since you get the most tax incentives on the home that is a primary residence. Make sure you understand the taxes that you will need to pay and if you can afford it.
Property management companies should be considered as well if you prefer to take a hands off approach, since they help with getting finding you renters, housekeeping services, and keeping the home secure. Maintenance can even be scheduled to take care of things that break while you are away from the home.
All of these costs need to be factored when you determine how often you need to rent out your second home to make a profit.
Find Property With Year Round Demand
Renters will be easy to find when demand is high. In fact, you may end up having to turn down renters to use the vacation home yourself during the peak of popularity in the summer. Instead of focusing on a property that is only popular during certain seasons, find one that has year round demand for tourists. For instance, a nearby ski resort could help attract renters through the winter.
If you prefer a home where there is not year round demand, that is perfectly fine. Just be sure that you can afford to let the property stay empty for those unpopular months of the year.
For help locating a second luxury home for your vacation property, work with an agent in the area you are looking to buy. They can even help guide you towards a home that will fit all your criteria.