Summer season is the vacation time for many people. It brings joy to them. However, there are also people to whom this season brings a touch of melancholy as it ignites their longing for a second home. Many people want to have their own place for spending long and lazy vacation or weekend getaways in any season.
However, the first consideration is how you can have such a place. Buying a vacation house is not a challenging task, but it becomes hard as it needs a lot of thinking and planning. It is an expensive affair so, everyone wants to pay more attention to every detail and plan appropriately. You can find homes for sale in Destin and Destin Florida Real Estate to assist you with everything regarding your purchase of a vacation house.
The experienced team of Destin Florida Real Estate is always able and ready to answer all your questions about buying a vacation house. To help you more, here is the list of questions people ask most frequently with answers.
Should they buy a single-family home or a Condo?
It is one of the questions people ask most frequently while buying a vacation house. It is totally your choice, in particular, it is about your personal preference. To answer this question, you need to ask yourself whether you want to purchase a vacation house for your own personal use, and renting is to redeem your cost, or you want to make as much money out of it. If you love watching waves while sitting on the balcony, owning a beach condo will make you the happiest.
On the other hand, you can go for a single-family home to increase your rental income. If you buy a house off the beach in Destin Florida, you can buy a bigger house and rent it to more people to get rental income.
What about the budget / how to plan the budget?
It is a great question and tops the list when people start thinking about buying investment properties. Unlike the primary residence, sometimes a lender doesn’t need a minimum of 20% down payment to buy an investment property. You need to pay the less down payments if you buy an investment property as your second home. Using a local lender can prove as the best resource for you in finding the optimum financing options.
The local lender will help you in estimating how much cash you need to put. They will also help you in finding the right price point by dictating your purchasing power. When talking about the budget or how you can afford a vacation house, always keep a few things in your mind.
First of all, when you consider purchasing a second home or vacation house, make sure you have enough funds. You not only have to pay monthly mortgage and interest payments. You also have homeowners insurance, property taxes, utilities, and many other assorted fees.
Secondly, understand one thing FHA – insured loans are a great option but only when buying your principal residence. These loans require a middling credit score and a small down payment. However, when it comes to buying a second home, you cannot use these loans.
Instead, you can go for a home equity loan on the principal residence or use cash for buying your vacation home if possible. You can also consider getting a standard loan for purchasing a vacation home.
However, you have to prepare yourself to comply with strict requirements and pay a larger down payment than the mortgage on your principal residence.
How much can they expect to earn?
When you are looking for an investment property to purchase, you must get a detailed cost analysis. Your realtor can provide you with the actual rental income if the property you wish to buy is a vacation rental. On the other hand, if the property is not operating as a rental, the realtor will provide you with the rental projections from a credible property management company. You will get an accurate view of the property’s potential after getting a projection from professionals having experience in dealing in this market.
The projection you get from the professionals includes the occupancy rate of similar rentals of the same locality and the average rental rates in the same area.
Should they manage it themselves or hire a rental company?
Hiring a property management company is the best option unless you have a lot of time in your hands to spare on it. The property management company will handle everything from cleaning crews, reservations, phone calls, repairs assistance, maintenance, and many others. You may see managing your vacation rental as an easy task, but it is not what it looks like.
What will help when the guest can’t use the air conditioning breaks, remote control, or get locked out at 10 pm? While a property management company provides 24/7 support for the rental guests. It means you can relax as your property is safe and sound and someone is taking care of your guests.
What do HOA dues cover?
When someone purchases a condo, the HOA dues mostly will cover insurance and utilities. For example, in many areas, the HOA dues include-
- Pest control
- Insurance on the building
- Upkeep of the amenities
- On-site management
On the other hand, HOA dues of a single-family vacation rental only cover the maintenance and up keeping of the neighborhood amenities. Always consult your realtor for accurate information about HOA dues.
What will happen if there is a hurricane?
Most of the condo associations include flood, hurricanes, and wind insurance in their HOA dues. However, when it comes to a single-family vacation rental, you have to find an insurance policy covering high winds and floods. Before buying the vacation rental, you should get an insurance estimation from several local agents for comparing coverage options and premiums.
Hopefully, these questions and answers can help you in your decision to purchase a second home or a vacation home.