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Guide to Buying Vacation Property
By Jim McKinley
Photo via Pexels
Retirees Can Use This Simple Guide to Buy a Vacation Property
For many retirees, buying a vacation home is more than just a way to relax throughout the year; it’s also an investment that can lead to quite a bit of extra cash under the right circumstances. The key is to plan well for each season, whether you’re in the home or not, from finding someone to help you take care of the property to keeping maintenance and insurance costs down. If you’re ready to start looking for a vacation home to purchase, use these tips to make the process as smooth as possible.
Figure out what you can afford
It’s essential to take a look at your finances and get an idea of how much you can afford before you start looking for a vacation home. There are lots of options on the market these days, meaning there are plenty of homes for every budget, so you’ll want to calculate how much you can part with for a down payment. This amount will ultimately decide what your mortgage payment will be, and if you decide to rent out the home, you’ll want to keep it at a reasonable number. Use a mortgage calculator to figure out how much you need to put down and to predict how much your monthly payment will be. Then, think about how you can stick to a budget and cut back on your expenses.
Find the perfect spot
Once you have a good idea of how much you can afford, it’s time to start looking for the perfect home. Some home buyers prefer to have a vacation getaway that’s a good distance from home, but that can be tricky when it comes to maintaining the property. In that case, it can be helpful to hire a property management company.
Check out several factors when you’re searching for a vacation home: the neighborhood, the access to local restaurants and activities, and the safety of the area. It should be a spot that you would want to live in year-round. Not only is this important for your own peace of mind, but it will also help you find renters should you decide to utilize the home to make extra money.
If you do decide to rent out the home when you’re not using it, it’s advisable to protect yourself from possible liability by creating an LLC, or Limited Liability Company. Even if you’re careful about screening tenants, posting safety rules, and making sure they understand their responsibilities, legal problems can still arise. As the homeowner, you’ll receive tax benefits from forming an LLC while protecting your personal assets from any litigation that might occur. Each state has different fees and rules when creating a Limited Liability Company, so read up on the regulations that are specific to each state. Keep in mind that you can save quite a bit of money by filing the paperwork yourself or using a formation service to take care of the LLC application process rather than hiring an attorney to do it.
Buying a vacation home is a big decision, so it’s crucial to take your time and make sure you’re prepared. Do some research on neighborhoods and look for resources that will help you throughout the process, such as a credit monitoring app that will allow you to stay on top of your score before you apply for a loan.