In the market for a vacation home? Whether you’re dreaming of a beachfront paradise or a backcountry lodge, a second home can spice up your life. While it’s fun to think about warm winters and family reunions in the sand, purchasing a vacation residence is a huge financial decision. Here are 7 tips to keep in mind before you buy.

1. Ease into retirement. Planning to retire and downsize in a few years? Buying a second home ahead of time can help you seamlessly settle into the next stage of your life. When it’s time to retire and sell your primary residence, your retirement space will already feel like home. 

2. Don’t rush your decision. Location, view, features and other amenities determine whether a vacation home is a wise investment or a financial sinkhole. Would you spend more time skiing or soaking up the sun? We know those listings are tantalizing—but make sure you get your money’s worth. 

3. Relaxation should be your main motivation. In many destinations—especially beaches and ski resorts—it’s possible to earn substantial rental income on a second home. However, renting out your home can mean constant cleaning and an inconsistent customer flow. Plus, to earn top dollar, you’ll need to open up your home to renters during peak season—the same time you’ll want to be there.

4. Can you go the distance? Don’t underestimate the difference between a two-hour drive and an eight-hour flight. An accessible vacation home will inevitably be frequented much more often than a remote residence a couple time zones away.

5. Calculate the costs. Don’t bite off more than you can chew—in addition to a second mortgage payment, you’ll need to foot the bill for real estate taxes, homeowner insurance and ongoing repairs and maintenance.

6. Find a lender who is familiar with the area. Local lenders will be comfortable with appraisals and lending in rural areas. Appraisals can be more difficult in rural areas due to outdated and hard to find comparable sales. Plus, a lender well-versed in the area can help you navigate local rules and policies. 

7. You can’t put a price on uncluttered time with family and friends. A second home can function as a retreat away from the hustle and bustle. Regular vacation time can help you recharge your batteries and live a happier, healthier life.


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