5 Things to Consider Before Investing in a Vacation Home Rental

TIM THOMAS TIM THOMAS Learn more

RealtyTrac reports that February is one of the best times to buy a home, and with mortgage rates continuing to inch up, the perfect time to invest in a second home as a source of rental income could be right now.

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But investing in real estate such as a vacation home is a big financial decision that can be intimidating without the proper knowledge.

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To better prepare you to take the plunge in purchasing a vacation home, I have put together some key factors to consider.

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Things to Consider Before Buying a Vacation Home Rental

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Step one is to make sure you have the finances in place to afford an additional mortgage payment. On top of the mortgage payment, it is also important to make sure that you can afford any other debts that might come with buying a vacation home.

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For example, can you pay to furnish it, and does it need any repairs? You should also have some financial reserves in case the home isn’t rented continuously and when it needs to be unoccupied for repairs after tenants vacate.

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TIM THOMAS

To the IRS, it is a property rented out during the taxable year but is occupied for more than 14 days or 10% of the number of days in which the property is rented.

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Renting out a second home teeters on the line of mortgage fraud or not, so it is important to understand the difference between an investment property and a second home that you rent out.

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5 Things to Consider Before Investing in a Vacation Home Rental

RealtyTrac reports that February is one of the best times to buy a home, and with mortgage rates continuing to inch up, the perfect time to invest in a second home as a source of rental income could be right now.

But investing in real estate such as a vacation home is a big financial decision that can be intimidating without the proper knowledge.

To better prepare you to take the plunge in purchasing a vacation home, I have put together some key factors to consider.

Things to Consider Before Buying a Vacation Home Rental

Step one is to make sure you have the finances in place to afford an additional mortgage payment. On top of the mortgage payment, it is also important to make sure that you can afford any other debts that might come with buying a vacation home.

1. Can You Afford a Second Mortgage Payment?

For example, can you pay to furnish it, and does it need any repairs? You should also have some financial reserves in case the home isn’t rented continuously and when it needs to be unoccupied for repairs after tenants vacate.

TIM THOMAS

TIM THOMAS

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To the IRS, it is a property rented out during the taxable year but is occupied for more than 14 days or 10% of the number of days in which the property is rented.

2. How to Have an Investment Vacation Rental Without Committing Mortgage Fraud.

Renting out a second home teeters on the line of mortgage fraud or not, so it is important to understand the difference between an investment property and a second home that you rent out.

Swipe up now to read the full post!

READ MORE