5 Vacation Home Questions for Clients
January 5, 2016
For many parts of the country currently in a deep freeze, having a warm place to escape on a regular basis sure sounds like a great idea. In fact, vacation and second-home sales are booming throughout the country. A 2014 report by NAR showed that sales of vacation homes soared to an estimated 1.13 million, the highest amount since they started tracking in 2003.
Whether your clients are looking for a relaxing beach getaway or a snowy Winter retreat, Real Estate Today Radio recently shared five questions real estate professionals should have their clients answer when starting their vacation home search.
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1. Can they really afford it?
While a recent report from NAR showed that 30 percent of vacation or second-home buyers paid in all-cash, most vacation home buyers will need to get a loan. Your clients must have enough income to pay for both the first and second-homes. Also make sure they have enough to cover the down payment and the closing costs, much like any home purchase.
2. What is the ideal distance?
Your clients should figure out if they want to choose a place that's a short drive from their main residence, so they can enjoy it as much as possible, or if they want a home in a completely different part of the country. Currently, the average distance people travel to their second-home is 322 miles, or around seven hours of drive time or one hour flying, according to research from NAR.
3. To rent or not to rent?
While rental payments can really help out with the mortgage, renters could get in the way of actually enjoying the vacation home. Before buying, it's important for clients to think about the reality of how often they want to stay in their second-home. Also remind them that if they rent out a vacation home for more than two weeks, they will have to pay income tax on that rent.
4. Do they want to involve family and friends?
A group vacation home purchase with friends or family can save money, but it can also cause a lot of headaches. If this is an appealing option for your clients, it's necessary for them to plan ahead. They need to make sure to get everything in writing regarding who gets the place and when, and what happens if someone can't pay.
5. Do they want to retire there?
If your clients want to buy a vacation home where they can eventually retire, make sure they think about what it would be like to live in it year-round, and if the house and surrounding community has amenities and services that they'll need in their senior years. Choosing a vacation home now that can eventually become a place to retire is a popular option for many, and it could be a smart investment, since interest rates are currently low.
Source: "Five Questions to Ask Yourself Before You Buy It," Real Estate Today Radio (Dec. 24, 2015)
Updated: November 23, 2020