According to a survey conducted by HomeAway, fifty-four percent of the people who decide to buy a second home as a vacation property intended to use it for rental income. Fourteen percent of the people intended to use that vacation property as retirement income. If one of the reasons you are considering buying a vacation home is to tap the potential benefits of rental income, there are more than a few things to consider.
Without a doubt, you have experienced your favorite vacation spot from the viewpoint of a renter. Moving from occasional renter to full-time owner and possibly to part-time landlord, comes with some important decisions. The following considerations are not meant to dissuade your infatuation with your favorite vacation spot. Instead, the questions every potential second home buyer should answer are intended to ensure your long-term satisfaction.
Why are you considering a vacation home?
This is more than just an impulse purchase. While you may have fallen in love with a specific area, you need to examine your long-term use of the property. When looking for a home in your favorite area, view it from the standpoint of a potential renter – even if renting it is not currently part of the reason you are buying.
Where is the vacation home located?
In order for the home to be a viable vacation property, it needs to be within a reasonable driving distance. The generally accepted distance is not so much focused on miles, but time. You should not have to spend more than three hours in the car, under normal circumstances. This distance/time consideration will be important if you do plan on renting it out when it is not in use.
Do you plan on renting your vacation home?
This is not a decision you need to make at the time of purchase unless you are factoring in the potential rental income as part of the mortgage arrangement. If you are leaning towards renting it at some point, you will want it as close to as many amenities and activities as possible. While you might be looking for an isolated retreat, the potential for rental income will be restricted to people looking for exactly those considerations. Keep it in where the fun is.
Are there advantages/disadvantages to renting a vacation home?
If you have been a vacation renter, you will have noticed several things about your experience. The property is often generically styled and while being nicely appointed, it is not filled with personal items. You will also need to determine how often you plan on using it for personal and family use and how much of that “peak time” will be open for renters. While some people are okay with off-season accommodations, it will provide less income compared to the best time of year. If you are renting the property for more than fourteen days a year, this will change your tax status. This may not be a bad thing though as the tax deductions available may be too attractive to ignore. Of course, you will want to consult with your tax professional on your specific circumstances.
You can get help with these decisions from someone like the Jones Group @ Sunriver Realty. Our team members are experienced hands at properties located in Central Oregon and can help you wrap your head around the idea and ultimately find the home that meets those needs.
How can we assist you today?
On behalf of The Jones Group @ Sunriver Realty
Nola Horton-Jones, Principal Broker/Realtor | ABR, C-RIS, e-PRO, GREEN, RSPS, CCIM Candidate
Bryce Jones, Broker/Realtor | ABR, CRS, e-PRO, GREEN, GRI, RSPS, SFR
Karen Marcy, Broker/Realtor
The Jones Group @ Sunriver Realty | 57057 Beaver Drive | Sunriver, OR 97707
Mobile: 541-420-3725 | Mobile: 541-420-4018 | Mobile: 503-327-9611 | Fax: 541-593-5123
Licensed in Oregon