You've dreamed of a luxurious vacation home for most of your life and now you have the means to make your dream a reality. But before you invest in the first sunny cottage or condo that catches your eye, take a look at the top things to avoid when buying a vacation home:
1. Taking on too much debt
You don't want the allure of the perfect home away from home to cause you to sink into debt, especially if you're getting closer to retirement. You may also find that lenders are less likely to finance all or most of your second home purchase. You'll need to have a good-sized down payment, and of course, that benefits you as you'll pay less interest over the life of the mortgage.
A home that requires you to borrow beyond your comfort level is not the right choice for you and will always be a sub-par location for your needs, no matter how lovely the view.
2. Overpaying for your property
According to the National Association of Realtors, the number of buyers has dipped from 16 percent to 12 percent. This puts it more in line with the historical average as the housing market loses a little steam, but it also means that there's less demand for homes. You don't need to pay more than the asking price or jump on a property that seems overpriced just to get what you want.
If you discover that you've overpaid for your property, it could take the luster off owning a vacation home and make it a sub-par location for you. Make sure you have a qualified real estate agent working with you who is familiar with prices in the area you're buying so you don't pay too much.
3. Choosing a property that can't be easily rented
Many owners earn the money to pay their second mortgage by renting the property when they don't plan to use it. That means that if you buy a residence that's tough to access, lacks basic infrastructure or isn't close to markets, restaurants and other activities, you might struggle to find renters. You don't want to depend on rental income and then not be able to get it. A remote cabin may sound appealing initially but it is likely to be a less than ideal location for you.
"We cater to home-buyers who are looking for the best of both worlds -- which means they get to enjoy their home as often as they like and they get to generate revenue that helps offset the costs of ownership." -Chris Williams, CEO of Legacy Global Development
4. Getting poor cellular or internet coverage
You may not be the type of person to check your phone every 5 minutes, but cellular and internet access is important for more than just looking at Facebook. These days, most entertainment - think Netflix, Hulu or even standard cable channels - come to your home via the internet. Smart TVs and appliances require an internet connection. Services that may not even exist today may be important in a few short years. Plus, having good cellular and internet coverage is an important consideration if you plan to rent, as visitors will expect this increasingly important amenity.
Before you get serious about a property, check to make sure it's not a sub-par location by testing with your own cell phone. You may also want to check access from other providers and make sure you can easily sign up for high-speed internet access at the new home.
5. Paying a lot for insurance
Before you commit to your vacation home, have a professional insurance agent give you an estimate for the cost of insuring your new property. You might have features on your property, like a swimming pool or tall trees, that you think you'll love until you find out what the added insurance costs will be. Another factor that can influence insurance costs is how close your home is to water, a flood plain, or an earthquake zone. Some insurance agencies won't even insure homes in the wrong zone. Make sure you're not choosing a sub-par location from an insurance perspective.
Working with the right professionals and buying in an established resort community can help you avoid getting a home in a sub-par location. Thinking with your head instead of your heart and being smart about the property you're buying can help you take a smooth path to owning your dream vacation home.
Looking for just the right location for your family? Schedule a Discovery Stay to explore our community and enjoy the Bahamian lifestyle firsthand!