Budgeting for a Vacation Home
Hidden Costs
When you’re shopping for that waterfront property with a view, you’ll need to keep in mind more than just the sale price. Things like property taxes, utilities, insurance, and maintenance fees have a way of adding up. Insurance is usually higher on vacation home because you’re not living there full time and they tend to be in areas prone to floods or hurricanes. According to Time Magazine, “property taxes may also run higher than what you pay now, either because the tax rate in the vacation area is higher than where you live, or because it's a second home and not a primary residence.” Consult with a real estate agent from the area on possibly purchasing a place just outside of the city to avoid high tax rates.
Even if it’s a smaller home, it will typically cost more than a primary residence due to it’s location. However, there are lots of lesser known, affordable locations throughout the US you should consider that will offer you all the rewards of a vacation home for less than a more popular spot. Additionally, Forbes Magazine urges you to remember that “When you’re not living in a home on a daily basis, you often don’t have the ability to tackle small problems before they become big ones—and that can translate into higher maintenance costs in the long run.”
Renting
Renting your vacation home could potentially bring in extra income to help with some of these costs. You’ll just need to keep in mind when you’ll be using the home and when peak season for renters is. Also look around and see what similar properties in the area are charging to determine if its worth the responsibilities and cost of renting. Depending on the location, you may not be able to book it year round.
Renovations
Second homes aren’t utilized as much as primary ones and therefore can be expensive to keep up to date. This means they usually require some kind of remodel in the kitchen or bathroom, and you may need to factor this into your budget when looking for your vacation home. In order to determine the cost of a possible renovation, you’ll need to decide the scale of it. Ask yourself what the kitchen is primarily going to be used for. If the home is off the beaten path, you’ll probably be cooking a lot. However, if it is near a bustling city, you may not be using it much. A remodel either could boost your resale value.
HomeAdvisor lists the average price to remodel a kitchen in Los Angeles as anywhere from $23,638 to $50,735 with a projected timeline of 2 - 2.5 months. Cosmetic changes such as painting cabinets and walls, replacing countertops and appliances, or installing flooring and cabinets are things you may be able to save some money on and do yourself. However, if it’s a smaller kitchen you have less space to work with, and things like plumbing, electrical, and or structural changes tend to get in the way and require a contractor. Cabinets tend to take up a large amount of the costs associated with a kitchen remodel so try and reuse what is already there by sprucing it up with some paint. If you can’t give your cabinets new life, opt for ordering stock ones instead of custom to help keep costs down.
Before making any purchases or decisions, think about the layout of the home and any adjustments you’ll have to make as you age and your mobility decreases. Avoid staircases, and pick a location that is right for you whether it be close to a town or relatives.