Buying and Selling Vacation Property: A Guide

Vacation property is residential property that serves as a second residence during vacations and holidays. Its owners can either use it for themselves or rent it out to other vacationers. If you buy a vacation home for yourself, the process isn't much different from what you went through to buy your primary home. But if you are looking to buy it so you can rent it out, the process can get a bit more complicated. But so long as you understand the ins and outs of buying and selling rental vacation properties, you shouldn't have too much trouble.

Vacation Property Basics

One of the biggest advantages of owning a rental vacation home is that you can use it to generate profit, which can help you pay off the mortgage and take care of other expenses. On average, the rents on rental vacation homes tend to bring back between 5 and 15 percent of the value of the house during each year. This percentage may be bigger or smaller depending on the region where the house is located, as well your ability to attract renters and how well you manage the property.

However, some of that money will inevitably go back into the vacation home. If you want to attract renters, you will have to advertise it in both print and digital venues. As a landlord, you will be responsible for collecting rent and paying for the vacation home upkeep and repairs. Also, depending on the age and condition of the home, you may need to invest some money to fix it up before it's ready for rent.

Finally, it is important to point on that unlike rental apartments, rental vacation homes won't provide steady income throughout the course of the year. They are rented on shorter terms, and vacation homes don't usually get rented off-season.

Narrowing Down the Location

When you are trying to decide which vacation home you should buy, you need to pay close attention to it's location. Consider the vacation spots in your area and throughout the United States in general. The more popular the location, the more expensive the location home will be. However, vacation homes in popular vacation spots are more likely to attract renters. If you can't afford some of the more expensive options, your may want to consider some of the vacation destinations that are popular in your area.

Once you picked out a few potential areas, consider the local attractions. This includes nature preserves, amusement parks, beaches and other outdoor recreational venues. Try to find homes that are located anywhere near those destinations.  You should also consider how your renters will be getting to the vacation home. If most of your renters will arrive by car, try to find a home with ample parking space. If most of your renters will arrive by train, consider properties within walking distance of a train station. Finally, you should be mindful of the property's immediate surroundings. While local amenities are all well and good, your renters would be more willing to pay bigger rents the vacation home has a nice view.

Tax Benefits

Owning a vacation home means that you will have to pay taxes on two homes. You can minimize the resulting tax burden by looking into what kind of tax exemptions you can get on both your primary home and your vacation home. Since you are earning income from your vacation home, you are eligible for business tax exemptions that you wouldn't otherwise be eligible for. For more information, look at the Internal Revenue Service's official website and, if possible, consult an attorney.

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