Buying a vacation home can be a life-changing investment, allowing regular vacations, getting to know the region, and eliminating discussions about where to go each year. Like the vacations themselves, the choice will depend on personal preferences.
Some buyers already have a clear idea about their second home before buying it, but it’s okay if you’re unsure. Analyze your options; you might even change places. It is important to note that with Rocket Mortgage, the property may qualify as a second home if it is not receiving rental income for more than 180 days in a calendar year. You must also live in the house for 14 days or 10% of the number of days the owner collects rental income from the property, whichever is longer.
The vision of the holiday home of your dreams in Spain differs for everyone. There are endless possibilities, from a country house with a swimming pool and gardens, an apartment in the Pyrenees with easy access to ski slopes, or a property on the beachfront. To make the best possible decision, here are a series of tips to keep in mind when choosing a vacation home and making the best investment:
First, assess the possibilities
Before acquiring a vacation home, a study and analysis of elements such as the affordable mortgage amount must complete if you want to rent for seasons and the benefits or even the revaluation looking towards a future sale.
Likewise, you should assess whether you are looking for a newly built or second-hand home, confirming that it is common to opt for the second option in the case of this type of property. Other aspects to consider as an investor are characteristics such as size, equipment, facilities, etc.
Choose the best area to invest in
The coast and the mountains are the most coveted destinations for vacation periods. In addition, they are also a considerably safe option, so the investment in this type of residence is profitable. It is essential to remind that if you bet on a place with a rising market, the house will have a high purchase price, but on the other hand, your options for future profitability will also be higher. Whatever the chosen place, we recommend visiting it in advance.
Hire real estate advice
Having real estate experts in the area who have experience selling second homes will help you choose the perfect home that suits your needs and pocket.
Know in-depth the fixed expenses
In addition to the mortgage amount, before buying, you must know the cost of variable expenses such as electricity, IBI, community expenses, home insurance, etc. Taking these costs into account will be vital to managing the economy of each one, and, if you want to rent the home during periods of absence, establish a prorated rent with a profit margin that is sufficient to cover expenses without a problem.
The critical piece: think of it as an investment for the future
Many people, especially the wealthiest, tend to invest a considerable amount to buy a vacation home, but is it worth spending so much? It is true that, in some instances, a vacation property can be something similar to an investment fund for retirement, either for seasons or to settle there permanently.
When putting it up for rent, there is always the doubt about doing it throughout the year or only in the summer. In this case, it would rely on the investor’s situation:
- If you rent it throughout the year, the profitability will be small, but instead, the income will be constant and safe.
- If you rent only in the summer, you will increase your exposure to supply and demand, but on the other hand, the income in the high season can skyrocket.
- If you have a mortgage on the property, receiving a fixed income is a safe way to cover, for example, the mortgage payment.
From Inversion, we recommend that you seek advice from real estate professionals before purchasing a holiday home. This investment can be very profitable, but you must consider many elements and ensure you do not overlook a single detail.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.