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Your vacation-home-buying soul-searching guide: Eight questions to ask yourself before you take the plunge

Considering the purchase of a vacation home? It’s a big step with lots to consider. We spoke with Christine Karpinski, the director of Owner Community for and author of How to Rent Vacation Properties by Owner and Profit from Your Vacation Home Dream, who recommended you ask yourself these eight questions before signing that contract.

1. Can I really afford a vacation home? You certainly don’t have to be wealthy to buy one. According to Karpinski’s Profit from Your Vacation Home Dream, the typical second home owner is 61 years old and has a household income of $76,900 — hardly Mr./Ms. Moneybags! Still, even if your income is well above this threshold, the answer to the question depends entirely on your lifestyle, your other debts, your expectations, and your willingness to take a risk. Take a good hard look at all of these factors. Crunch the numbers. Be totally honest with yourself before you sign on the dotted line.

2. Do I have time for a vacation home? Realize that you as the owner will have to spend a minimum of a few weekends a year putting everything in order. Do you have the time, money, and willingness to do that? If your family has two intense full-time jobs and a couple of small children, the answer might very well be no, or at least, wait a few years until both kids are potty trained! Just be honest with yourself. If you’re really committed to owning a vacation home, you probably can. If you’re not certain that you’re ready to spend your precious free time tending to it, you should probably reconsider.

3. Do I want to buy this vacation home for personal use, for a long-term rental investment, or both? The answer to this question will drive many of the decisions you need to make. If you’re buying solely for your own use — and you’re sure you can afford that option — you can allow your heart to make most of your decisions for you. If you will need to rent out the home to defray costs and maybe even turn a profit, you’ll have to think like a businessperson. In other words, no matter how much you love that mountain chalet in that rapidly developing ski resort area, if you aren’t certain you can rent it out enough to break even, exercise caution.

4. Am I willing to compromise? The four criteria people look for in a vacation home are price, size, location, and view. You are almost certainly going to have to compromise on at least one of them. “Sure, you’d love a gorgeous, spacious, inexpensive home with a glorious view in a prime real estate location,” says Karpinski. “Who wouldn’t? But such properties don’t exist in this universe! Your ideal vacation home may be a three-bedroom cottage on the beach, but when you see the price, you may absolutely have to compromise on view and choose the cottage across the street. If you’re too set on finding the perfect situation, you might as well forget it.”

5. Should I rent by owner or use a property management company? Karpinski admits that she is a rent-by-owner advocate. She feels that management companies charge too much money. What’s more, she adds, by renting your property out yourself, you can generate cash flow from your investment, maintain a feeling of control based on the fact that you choose which guests stay there, and make plenty of new friends. And as her books explain, once you learn the basics, renting by owner is less difficult and time-consuming than you might think. However, Karpinski acknowledges the fact that there are sometimes individual circumstances that make working with one the best choice. If you do decide to go with a property management company, you may want to investigate the ins and outs of letting someone else take care of your “baby.”

6. Am I okay with strangers staying in my home? Some people have a real problem with the thought of anonymous renters invading their privacy. “I had one woman ask me if she could ask renters not to have sex in her bed,” laughs Karpinski. “Obviously, my answer was a resounding NO. If you’re not psychologically wired to feel comfortable with people staying in your home, you might as well forget the whole idea.”

7. Is the location I’m considering close enough to my primary residence to be practical? You may live in upstate New York and love the thought of owning a vacation home in sunny Florida where you can enjoy a winter escape. Sounds very appealing in theory, but consider the reality. Every time you need to visit your vacation home, whether for a getaway or for maintenance reasons, you’re going to have to hop on a plane (expensive!) or make a looooong drive (exhausting and — considering the price of gas — also expensive). It’s usually best to choose a property located within a three- to six-hour drive from home. On the other hand, if all other factors point to a vacation home located outside that distance window, don’t be discouraged. Karpinski insists that there are viable maintenance solutions for property owners who live farther away. You may decide to hire an outside party to handle such issues for you, reserving your visits for fun and relaxation only.

8. But what if I buy my vacation home and something goes wrong? What if I lose my job? What if I can’t find enough renters? What if I realize it was a poor decision too late? What the “what ifs” are actually about is risk, and, yes, risk is a reality. But if you truly want a vacation home, well, some risks are worth taking. Karpinski likes to quote an article by Jack Simpson, real estate broker, columnist, and vacation home owner: “Trying to eliminate the risks often creates other risks. Some people put all their money in a ‘safe’ insured account only to see their buying power taken away by taxes and inflation. Ask yourself, ‘What is the worst that can happen?’ To me, the worst thing is seeing your life slip by without the risk and reward. That’s sad ¦ I believe Kris Kristofferson put it best when he wrote the song ‘I’d rather be sorry for something I’ve done than for something I didn’t do.'”

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