You've been kicking around the idea of buying a vacation home for quite a while now. A few years ago, it seemed like a great idea. The real estate market was hot, hot, hot, and properties everywhere were appreciating rapidly. Getting a good return on your investment felt like a sure bet. Now, however, things have cooled off considerably. With home sales slowing across the nation and interest rates poised to rise, your enthusiasm is waning. But don't shelve your vacation home dream just yet. According to Christine Karpinski, now is actually the perfect time to take the plunge.
"It's true that the real estate market has stabilized, but that's a good thing," says Karpinski, director of Owner Community for HomeAway.com (an online vacation home rental marketplace) and author of How to Rent Vacation Properties by Owner and Profit from Your Vacation Home Dream. "It's actually an easier leap of faith to buy when the market is normal than to buy when real estate prices are going up ten to twenty thousand dollars a month."
There are several reasons why now is a good time to buy a vacation home. First, says Karpinski, we're in a buyer's market. Because houses aren't flying off the shelf, there's less pressure on you to make a quick decision. You can afford to take your time, do your research, and refine your plan.
Second, more stable home prices usually mean more stable property taxes and insurance costs. That's good for your bank account over time (and Karpinski believes buying for the long haul -- i.e., not to turn a quick buck -- is the smart strategy).
Third, even though overall real estate sales are down, sales of second homes are stronger than ever. In fact, 2004 and 2005 were record years for vacation home buying. That means if you want to rent out your vacation home -- a plan Karpinski heartily endorses -- you're sure to find a healthy customer base.
"An estimated five million vacation homes are currently being rented world-wide, yielding an estimated $100 billion-plus in transactions on an annual basis," she reports. "No doubt about it: the idea of renting vacation homes as opposed to staying in hotel rooms is a growing trend. There is a definite 'if you build it, they will come' scenario going on here. And the Internet has only made things easier for vacation homeowners. With sites like HomeAway and VRBO, your property is only a mouseclick away from interested renters. If you're on the fence about buying a vacation home, knowing that you can rent it out without too much effort might make the decision easier."
If you do decide to purchase a vacation home, Karpinski offers a few tips:
"Surveys conducted through HomeAway, Inc., reveal that the average weekly rate is $1,656, and that the average property is rented out twenty weeks or more per year," says Karpinski. "These figures suggest that the average vacation home brings in more than $33,000 in rental revenue each year. According to survey results, 67.15 percent said that the cost savings is the primary reason that they rent by owner. Interestingly, 37 percent said they do it because they like the sense of control. They feel they can take better care of their property than anyone else and like to know who is renting their homes."
Of course, owning a vacation home isn't right for everyone. Karpinski emphasizes the importance of doing your homework as well as plenty of soul-searching before making the decision to buy.
"Yes, I've enjoyed my vacation homes and have profited from them, financially and otherwise," she says. "It's nice to have a place to escape to, and I've made some great friends over the years. But no doubt about it: buying a vacation home, especially one you're going to rent out, means embarking on a whole new lifestyle. Read up on the subject so you'll know what to expect. Doing plenty of research and making an educated decision will keep your vacation home dream from turning into a nightmare."
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