When it comes to purchasing a vacation home, emotions can run high. In fact, they can overwhelm the process and interfere with the logical purchase decision that should be based on not just the economics, but the long-term goals of the buyer. While making the right choice for your second home is essential, the process can be boiled down to seven suggestions.
1. Choose the location carefully. Conrad Hilton used to say “location, location, location”. And he was right. When considering the Bahamas, there are many islands to choose from. They all have their own idiosyncrasies. But, a buyer should always consider how long it takes to get from home to vacation spot and then once there, how long it takes to get to those activities that are important.
2. Rent first. Buy later. Take a test drive of the area you plan to purchase in. In fact, maybe take three or four opportunities at different times of the year. Then, and only then, will you have an idea about little things like traffic, crowds, restaurants, and other activities immediately available.
3. Don’t buy in haste. Emotions can get the best of anyone. When you fall in love with a home, take a minute to reflect. In fact, take a day or more. Seek a trusted advisor for advice.
4. Create a budget. Make certain that you have an understanding of all costs. Things like taxes, electricity, even cable service can add up.
5. Have a rental plan. Many owners of second and even third homes make their investments work for them by placing their asset in a rental program with a qualified local management and leasing company. While management fees can exceed 30% of the rental income, it’s well worth the investment by gaining peace of mind that someone on the ground near your home has an interest in its well-being.
6. Be realistic about how often you will visit.
7. Understand what is in store as far as unaccounted for maintenance expenses. If you are purchasing a new home, this is not of general concern because most new homes come with a limited warranty of some type. Ask your sales agent to provide a warranty statement. Older homes are another matter and require that the buyer seek a professional home inspector, if possible, to thoroughly inspect the home. Air conditioning systems and appliances are the biggest issues. Don’t waste your time and money with home warranties because most will have “out” clauses that disallow many of the very things which fail. Place into an escrow account enough money to handle unplanned failures.
If you follow these simple rules, your path to owning a second home in paradise will get just a bit closer.