Posted by JanL on October 12, 2016
Are you thinking of buying your first second home, AKA your first vacation home? If so, congratulations! Owning a second property for the sole purpose of having a place to relax in your favorite destination is a goal most people strive to accomplish. However, the process and details of actually getting there can be quite daunting and stressful, to say the least. If owning a second home has been a life-long dream but you’re worried about the potential burden, here are some of the biggest pros, financial and otherwise, to owning a second home.
If you’re considering buying a second property, take some time to consider your hobbies and what you want to spend your time off doing. Maybe you’re finally in a position to purchase your dream vacation home for guaranteed relaxation during your getaways, or maybe you’re planning on retiring in the near future and want a home in your favorite destination to call your own. Whatever the reason, the majority of your time off in the future will likely be spent at your second home. Purchase a property in a destination you will love for years to come that caters to your interest and hobbies (such as skiing in the Rockies)! There’s nothing quite like being able to spend your time off doing exactly what you love, and getting to go home while you do it.
Think about the last time you went away for two weeks – how much time did you spend fretting over what you would pack leading up to your trip? When you become a second homeowner, never again will you have to worry about remembering enough underwear, how you’re going to lug your ski gear through the airport or call the hotel ahead of time to make sure there’s enough pillows in your room when you arrive. When you own a property, you furnish and stock it. Having a vacation home in your favorite destination gives you the opportunity to prep it ahead of time for each time you go and use it. That means you can hop on the plane for a month-long getaway with nothing but a carry on and the clothes on your back, knowing full well your favorite comforter is waiting for you on the mattress you picked out when you arrive!
Popular holidays like the Fourth of July, Thanksgiving and Christmas are a great time for the extended family to get together and catch up. Most people have time off work and kids are on break from school. However, these are heavy tourist weekends in mountain destinations like Breckenridge, and it can be incredibly expensive to find decent accommodations during these peak season times. Sometimes it’s even entirely impossible to find accommodations for everyone in a large group. Owning a legacy home gives you the opportunity to host the next family reunion or gathering in a property you
don’t have to worry about reserving ahead of time. Many mountain properties even come with several spare bedrooms, bunk beds and additional sleeping accommodations – perfect for a large gathering. Plan your party the way you want to without having to adhere to the rules of a hotel or Airbnb.
Purchasing a second home is by no means cheap, and taking on a new mortgage on another property can be daunting – especially when it comes to getting your head around making monthly payments on home that you, quite frankly, won’t likely use more than a few weeks out of the year. However, even purchasing a luxury mountain home in Summit County, Colorado is more affordable than you think. Many vacation homeowners in the county choose to rent out their property during the off season, or even full time to locals and tourists. Additionally, you can opt for a “lock off” style rental and make extra money renting out your home while you’re still using it. Doing so can help you generate a substantial amount of income to subsidize your mortgage so it’s not as much of a burden. Plus, you get the added benefit of making sure your home is looked after year round (just be sure to rent to responsible guests/tenants)! There are a multitude of options when it comes to renting out your home for profit, from VRBO to Airbnb. However, if you can manage renting out your home on your own, you’re guaranteed to make 25%-40% more income.
There is a myriad of tax benefits when it comes to owning a second home. According to the National Association of Realtors, the average homeowner saves approximately $3,000 a year in property-tax and mortgage-interest deductions alone. That might not be enough to pay for renovations if your new vacation spot is a bit of a fixer upper, but guess what? There’s a tax write-off for that, too! If you need to make upgrades to your new digs, you can deduct the interest on a home equity loan (within limits). Add that to property tax deductions and you’re saving a boatload of money – especially if you’re taking advantage of renting out your vacation home when you’re not using it. Maybe one day you’ll decide you no longer use the vacation home enough to justify it, or you’ll move to your new property full-time. If you end up selling one of your properties down the line, you’re looking at the added benefit of selling for full profit as you won’t need the cash to purchase a new residence.