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5 Essentials for Buying a Vacation Home

By Julie Anne Russell

  • PUBLISHED March 20
  • |

If you’ve decided to purchase a vacation home, whether a rural escape, a waterfront sanctuary or an urban pied-à-terre, the No. 1 consideration should be your finances. 

Can you comfortably afford the home itself, along with the accompanying costs: utilities, property taxes, maintenance, insurance and travel to your new property? If the answer is yes, then you’re ready to head out with a real estate agent. Here are some factors to weigh when looking for a vacation home.


The Purpose of the Property
The most critical decision is whether you’re truly buying a vacation home—for you and your family to enjoy for years to come—or an investment property. Making that distinction can avoid a host of other problems down the line, says Mark M. Kitabayashi, a realtor with decades of experience in the Seattle area.

“If you want an investment property, you should be looking for an apartment or a duplex; that’s an investment,” Kitabayashi says. Factors such as whether you like the look of the house, whether or not the layout works for your lifestyle, or if there are enough bedrooms for all your grandkids, shouldn’t come into an investment decision. But they do matter—very much—in your vacation home. “Blurred lines between vacation homes and investment property can become an issue in the future,” Kitabayashi says.


How Often You’ll Use It
Ideally, says Kitabayashi, you’ll stay at your vacation property regularly, and certainly more than once a year. “There’s no perfect math here,” he says, “but if you’re not using the home in excess of 45 days a year, it’s usually not worth it.” After all, with the overt costs, such as the mortgage, as well as the less obvious expenditures—paying someone local to handle maintenance and cleaning, for example—if you’re not frequently using the house, it may make more sense to just rent.


Location, Location, Location: Part 1
Realistically, how often you use your second home depends how often you can feasibly get there. Which is why the distance from your primary residence is also a critical decision. Does the distance allow you to go several times a year? “For some people who are financially stable enough, it might not make a difference,” says Kitabayashi. “But for the majority, it definitely does.”

His advice: Start small and local. “If the location is drivable within a few hours, and you can get there most weekends, that’s a lifestyle difference,” says Kitabayashi. Plus, if anything does happen to your property—such as a burst pipe or weather damage—you can quickly make the trip.


Location, Location, Location: Part 2
Once you’ve settled on an area at the right distance, get to know it well before you buy and at the peak season you’ll be using the house. 

“Spend the season and see if this is where you really want to be,” says Kitabayashi. For example, you might enjoy a quiet cabin in the woods for a weekend—but not every weekend of the summer. Since you’ll need to hang on to the house for approximately three to five years to get your money out of it, says Kitabayashi, consider if you truly want to invest your money in that location for at least that amount of time.


Don’t Focus on the Resale Value
If it comes down to the house you love and the house you think will sell better someday, consider this: Money does matter, but so does making certain the house works for you and your family, improving your lifestyle and becoming a place you love to spend time. “If you’re not enjoying the home, you’re probably going to end up selling in two years anyway,” says Kitabayashi. And that will mess up your investment timeline. But if you’re holding on to a property for at least a decade, you’re much less likely to lose money, he says.

One financial danger to sidestep, says Kitabayashi, is sinking too much money into improvements. “Do you really need granite countertops and heated floors in a house where you spend one month in a year?” he asks.

 Ultimately, balancing the rational parts of the home purchasing decision with the emotional ones should lead you to the right decision. “At the end of the day, we buy the house that we fall in love with,” says Kitabayashi.

Julie Anne Russell is a Brooklyn-based freelance journalist. She writes on personal finance, small business, travel and more.

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