First we need to sit down and talk about what your goals are and how much you have to invest. Then we get you pre-approved with a local lender. If you’re buying a 2nd home or vacation home for yourself you need a down payment of at least 10% of the purchase price. For a vacation rental/investment property you will need 15%.
Interest rates for 2nd homes are the same as a first home purchase. If you purchase any kind of rental or investment property the interest rate is usually about 3/8-1/2% higher. Click here to use a Mortgage Calculator. If you are unsure of your interest in a vacation rental, just buy a 2nd home and you can always do a vacation rental later, if you choose. Another option for doing a vacation rental is to purchase a home that already has a second dwelling on it or has the potential for a second dwelling. This is the option I have. There is good and bad with it but, for me, the good outweighs the bad by quite a bit! My vacation rental started out as a full time rental property, which was nice but the tenants were there ALL the time and they left the house in a mess. So I decided to try the vacation rental option and so far, I love it.
My vacation rental is next to my main house so I do see my guests and my backyard is not as private as I would like it to be (you know, you always think people are looking at you through the windows when they really aren’t!), but I can change that. If you purchase a main home with the potential for building a vacation rental you want to consider site location. Can you situate the rental farther from your home? Where is the septic tank (the farther from the septic the more expansive)? What is the size of your septic? 3 bedroom? 4? This will determine the number of bedrooms in your rental or you may have a studio rental. If you purchase a property with the potential for a second dwelling you just need to go through all the permitting a building process and that’s a whole different path. Let’s talk about that in person if that’s what you want to do. Let’s assume you bought a vacation rental or a property with a main home and a secondary dwelling.
What do you do next? You need to furnish it! We’ll discuss that next week. The rest of this series is the fun stuff! If you want to start browsing some homes click here to be redirected to my home search page. See you next time!