Realtor.com's Beth Braverman weighs in on the recent surge in vacation home purchases, and asks potential buyers to consider a few factors before deciding to take the plunge.
According to a 2014 National Association of Realtors survey, vacation home sales soared to 1.13 million, which is the highest level recorded since the survey began in 2003, and a 57% increase from 2013. Braverman urges those thinking about making the switch from renting to buying to consider all the big-picture financial commitments involved—including expenses that are often overlooked such as insurance, maintenance, and utilities.
Lots of vacation home buyers think that they’ll offset their costs by renting out their property when they’re not using it. While this can be a fine strategy, it may not be as simple as it seems. If you’re financing the home, renting it out means lenders will consider it an investment property and offer you less favorable terms. And if you use the home more than two weeks per year, you’ll lose some of the rental property deductions offered by the IRS.