There are many reasons to buy a vacation home and every individual will have their own personal circumstances to consider. For some, a vacation home may represent a place to build memories with friends and family. Yet to others it may simply round out a diversified investment portfolio. Despite these differences, there are several common reasons to buy a vacation home that serve as motivation to complete a purchase.
In this article, we explore the top reasons to buy a vacation home, including:
- Owning the perfect getaway
- Investment purposes
- Creating family memories
- Retirement planning
With these reasons in mind, buying a vacation home may just be a good idea
The Perfect Getaway
The first, and likely most obvious reason to buy a vacation home, is that you will have place to spend your vacations.
By purchasing a vacation home, it will take the guesswork out of your vacation destination. Importantly, you will be able to vacation comfortably in your “home away from home”, all the while taking pride in ownership. Owning a vacation home may also afford you the opportunity to take advantage of seasonal temperature changes by following the seasons. Specifically, you may be able live in your primary residence for most of the year while spending your summer or winter months in your vacation home. In short, you can purchase your own perfect getaway.
Investment Purposes
Whether purchasing a vacation property makes economic sense will depend on a number of criteria, including the property to be purchased and your own personal financial situation. There are, however, several reasons why vacation homes make great investments.
For instance, real estate in both the United States and Canada have seen historically strong returns on investment. And while the real estate market can be volatile over the short term, it is a relatively stable investment over the long term. You also have the opportunity to earn passive income by renting out your vacation home when its not in use. If you buy in a prime tourist destination, your home will be able to command fantastic rental rates. Importantly, you can build wealth with the bank’s money. Given current interest rates, the money earned from your vacation home, if done right, will often exceed the underlying mortgage costs.
Be sure to try our vacation property investment calculator to determine your potential return on investment should you choose to buy a vacation home.
Family Ties
Owning a vacation home is a great way to bring family and friends together. By having a place to return to year after year, you and your loved ones will have the perfect place to create lasting memories.
Strong family bonds are an important element of any individual’s well-being and what better way to strengthen these bonds than annual trips to the family cottage. Further, with appropriate planning, you can arrange to have the home passed down to your children and hopefully one day their children. While purchasing a vacation home represents a big financial commitment, you certainly can’t put a price on creating lasting memories and ultimately the legacy that is passed on to your children.
Retirement Planning
A vacation home represents an excellent try-before-you-buy investment for an area in which you are interested in retiring.
By purchasing a vacation home now, you can get a taste of living in that area. Do you like the region generally and the neighborhood more specifically? Can you picture yourself living there in your retirement years? Many times people elect to take the plunge and move to a place when they retire only to regret it later on. For instance, the vacation destination may have appropriate infrastructure and amenities for young families but be lacking adequate support for seniors. By spending time in the area over the years, you will get a better sense of its advantages as well as its limitations.
Additionally, If you pay off your mortgage by the time you retire, your vacation home can help fund your retirement dreams. For instance, you could sell your primary residence, use that as your nest egg, and then make your vacation home your primary residence. Or you could choose to keep both properties and earn rental income from one or both of them. In short, the equity you have built up over the years on your vacation home affords you more financial flexibility in retirement.
We hope you have enjoyed this article on the top reasons to buy a vacation home. Be sure to explore other articles on buying a vacation home.