A show on HGTV called Vacation House For Free has started people thinking about the possibility of getting a vacation home that they could rent out in order to leverage the home to ultimately pay for itself. The goal would be for the rental income to cover all operating costs for the property and still leave the owner with some open time to vacation in the home.
For most of us, the idea of owning a second home seems impossible. However if you have your heart set on investing in a vacation rental you can start by saving up a down payment or, you may consider taking a second mortgage out on an existing property to make this dream a reality! If you have equity in your current home a second mortgage can be obtained with a good interest rate and make it possible for you to invest and get your vacation home for free.
An article in Business Insider interviews the host of Vacation House For Free and talks about all the considerations that go into this type of investment. If you vacation in the same location regularly this may be a smart investment for you.
Location, Location, Location – When looking for a vacation home the idea of being just outside a major destination may not seem so bad if you can save some money on the price of the home but you also have to evaluate it from a rental perspective. A home that is far away from amenities may be less expensive to buy but it will also be harder to find renters and the rental price will be lower.
Convenience – Choose a vacation home in an area that will be easy for your family to enjoy. In most cases a vacation home a few hours away from where you live is the most practical.
Prepare to Sacrifice the High Season – Typically every vacation destination has a high season. In New England our ski towns experience their high season in the winter months while a lake home would be most popular over the summer. If you are buying a vacation home with the intention of getting it to pay for itself, be prepared that you may not get to go at the best time of year. If you choose a ski home you will not be able to go every weekend in the winter and still bring in a solid rental income. If you can afford it, you can probably save a week for yourself during the high season. Finding a home that your family will enjoy year round is important.
Calculate all Costs – The cost of a vacation home is more then just the mortgage. You have to keep in mind that there will also be taxes, maintenance and replacement costs, rental fees, utilities and insurance. Look at all the costs and figure out exactly how many weeks you have to rent out the home to cover the costs.
Keep Renovations Simple – The best way to get a good price on a home in a popular vacation area is to find one that needs some work. However doing a complete overhaul of the property will be expensive and stressful. Make sure you add fresh paint and keep it clean and well organized and tastefully decorated. Keep renovations to what is absolutely necessary.
Stock the Home for Renters – Your renters will have the best experience if they have access to all the things that you love about your vacation home. This may be a cart stocked with beach chairs and sand toys or a binder full of all your favorite activities. Help provide what a family needs to have a fantastic vacation and they will be more likely to rent your home out year after year.
If you are interested in finding out if getting a vacation home for free could work for you, make an appointment with one of our Loan Officers today! We can help you evaluate your current financial situation and determine the best way to get you the vacation home you’ve been dreaming of.