Broker Associate at RE/MAX Alliance, based in Breckenridge, Colorado.
Vacationing is one of many people’s favorite activities for relaxing and recharging. While it may be nice to explore the world and travel to many different locations, for many travelers, there’s one place they like to return to each year.
Investing in real estate in your favorite locations is a great way to not only always have a vacation to look forward to, but also to build financial security over the years to come. Real estate, just like most everything else in life, is subject to economic fluctuation. However, investing in real estate has historically been shown to help individuals build financial wealth and security. Here are five things to keep in mind as you search for a vacation investment property.
1. Connect with a real estate advisor who understands the lifestyle you’re after.
Most second-home buyers will start by doing a solo search, typically on real estate search engines or even on-site by window shopping brokerages. This is helpful as you build a draft of your must-haves and wants list for your investment property. Vacationers typically book stays based on an advertisement and pictures seen on the internet, and while this works for a location that is likely to be a one-time visit, it’s insufficient if you plan to make someplace a recurring destination.
My recommendation is to start by building a relationship with a real estate professional who has a lifestyle that aligns with your interests in the city you’re targeting — perhaps you are a skier, hiker, diver or outdoor enthusiast. Start by calling and interviewing real estate agents and brokers to discover what activities they like to do in the local community instead of simply asking for help to find a property.
2. Start your search early.
With most short-term rentals booked in advance, browsing and trying to schedule showings for an investment property during the holidays or peak travel times can be challenging. You will be left with very limited availability and you will be at the mercy of other vacationers and rental companies, so be sure to plan ahead.
3. Experience the location and the accommodation.
Trial and error can be a fun way to experience new locations and accommodations, but using the personal experience and the local knowledge of a real estate professional can save you time and reveal better property matches. Ask your local agent to get you access to a property that would serve the dual goals of a planned vacation and exploring a potential investment. There is no better way to experience a property firsthand while vacationing and evaluating what it would be like to make it a second home and an investment.
4. Don’t underestimate the power of family and friends.
Traveling with family and friends will bring excitement and good energy to the vacation, but they’re also able to provide honest feedback and suggestions to factor into your decision-making process of a possible investment. Evaluating historical data and patterns is always an important component of making an educated decision, but this due diligence misses the elements of a property that only the eyes of friends and family would reveal. Ultimately, a vacation investment property should also be appealing to your future guests.
5. Do not forget to focus on relaxing and energizing.
While it is great to take advantage of trips to plan for your financial future, it is also important to focus on the true goal of vacationing, whatever it may be. Planning early and having an established local connection will allow you to spend as little or as much time as you like on the house-hunting process during your trip.
Investing in real estate is not for everyone and may not be an easy decision, but owning a vacation property in your favorite destination is a smart way to generate passive income, realize tax benefits and plan for your future. The possibilities are abundant, from trading vacation time with other property owners in different locations to offering the property as a treat to friends or family members.