So you’ve probably seen an advertisement for a vacation home or have visited a friends farm or beach home and are seriously thinking of buying one for yourself. What are the important things to keep in mind?
At the very beginning, the question you should be asking yourself – Should YOU buy a holiday home? – let us go into some of the pros and cons of vacation home ownership.
First the Pros:-
1. Your own familiar getaway paradise. Life is worth living because of the journey and the time we spend with our loved ones. Every phase of life is short and will never come again. It is important to have a place that is ‘home’ but yet is away from the hustle and bustle of city life – a place where your children can learn to walk, can have their friends over to run around carefree, a place where you can enjoy the fresh air, jog or cycle without any noise and traffic – you get the drift.
2. A Vacation is never far away: By owning a vacation home, you ensure that your vacation is never too far away and you have limited to no planning before going on a holiday. You don’t need to make bookings, don’t need to budget and hopefully don’t need to buy an air ticket to visit your vacation home. As they grow older your children can do the same and so with their own children who can visit for extended spans over their vacations.
3. Enjoy beauty, culture and fresh air: The scenic beauty, cultural aspects and laid back aspects of most vacation towns serves as a great antidote for stressful city life. If you are a used to running fast, over achieving and constantly battling ideas and business plans, you will appreciate the time and inspiration that nature and surroundings provide. There is no better environment to write that business plan, your next novel or paint some landscapes as compared to your vacation home.
4. Prestige and the company of other like minded people: Frequently in most countries vacation destinations tend to attract like minded owners – affluent, intelligent and affable. Towns have country clubs that are considered prestigious and where you can enjoy the company of other residents and sporting and other communal facilities. You will also be able to entertain friends visiting the destination and staying in hotels in the comfort of your own home and throw parties on the big occasions.
5. Financial benefits: While making money from real estate requires a lot of analysis and insight, buying in an established vacation destination ensures that your property will see continuous exposure from travelers visiting the place to s tay in the many hotels and thus holds value and appreciates. While holiday home ownership is presently the preserve of a few, in the years to come, a great number of families will embrace the culture providing a market for you in case you decide to sell your property. You can also use websites like Tripvillas to rent out your home to travelers and generate income which is significant by any standard.
Now to some cons:
1. Maintenance and Upkeep: The biggest sole issue with vacation home ownership is the maintenance and upkeep of the property. As compared to a hotel where you only pay for the nights you use the property, with your own home, you will need to take full responsibility for the maintenance of the property even if you use it sparingly. This may involve smaller costs like paying taxes, utility bills and insurance and even larger costs to hire a full time caretaker or security guard in case your property has more valuable possessions.
2. Time and Energy: A vacation home is a commitment and will consume time and energy- from thinking about how to furnish it to visiting it regularly to tending to the garden to paying the utility bills – nothing comes easy and you will have to take time out to do these things. For the children of the family, you have to be careful so that they don’t feel visiting the home is a lot of work and eats into any other more glamorous vacations like those that their classmates are experiencing as they travel across the globe.
3. A financially illiquid asset: While you could always sell your vacation home, the hard truth is that we as human beings tend to be emotional and develop bonds with our homes. Over time it may appreciate into something of significant value in comparison to your overall net worth but it is an asset that is difficult to monetize without selling outright.
Now to the more important question of should YOU buy a vacation home – Notice that I have highlighted the you. This is reflecting what I feel that the decision of buying a vacation home is one that should primarily be decided by yourself and your own circumstances. Here are some important points to consider:-
1. Do you have significant income and would like to at some point slow down? If so, it makes great sense to buy a vacation home and pay it off now so that you continue to enjoy the benefits later on.
2. Are you in a profession where creativity is important – e.g. are you an artist, a creative person, an author, movie maker, entrepreneur, in advertising etc.? If so, you would definitely benefit from the time and inspiration that a vacation home provides.
3. Are you reasonably grounded -i.e. are you certain for the next 5-7 years that you will be able to visit your vacation home and use it for your holidays? If you feel you will be jet setting the world for work then probably a vacation home is not the best place to keep your money.
4. Do you enjoy decorating, DIYing, pottering about the garden etc. ? If so, then you will enjoy doing so at your home. If not, then it will just feel like a chore.
5. Does the entire family want to do this? Is there a mutual understanding and desire to build a family getaway home? Does everyone accept the sacrifices that need to be made to preserve and visit the home while of course being eager to enjoy the benefits of the home?