A vacation home can be a great investment in terms of financial gain and enjoyment. Before you buy in Chicago, be sure to consider these tips:
Make sure it’s rentable…
Whether you’re interested in renting out your secondary home or not, it’s a good idea to buy with renting in mind–after all, a vacation property’s rental potential will certainly affect its resale value. You’ll want to ensure that local ordinances allow for short term rentals, and that your property is in a location (and condition) that’s attractive to renters.
…But don’t rely on rental income.
While renting can be a great source of income, it’s rare for rental revenues to cover the full costs of owning and operating your vacation home. Additionally, to benefit from Chicago tax deductions associated with renting, you’ll only be able to occupy your vacation home for two weeks or 10 percent of the rental days (whichever is greater). If that doesn’t sound realistic, you’ll need to account for those costs in your financial analysis as well.
Be realistic about price.
Remember that a vacation home is icing on the cake, not the cake itself. Also note that some banks may impose stricter requirements on loan applicants. Before you commit your hopes and dreams to a big, beachfront home, be sure you have enough cash flow to make the down payment and cover your new mortgage. Don’t forget all of the costs above.
Conduct hands-on research.
Even if your prospective vacation home isn’t within driving distance of your primary home, you still shouldn’t buy a vacation home without seeing it first. More than that, you shouldn’t buy a vacation home unless you absolutely love the area. Given that a vacation home is a long-term investment, and since you’ll still own (and pay for) your vacation property in the off season, it’s important to get a full experience of the surrounding community before you commit.
Whether you’re buying in, near, or outside the Chicago area, reach out to a local real estate professional for in-depth advice and guidance for what to do next as you search for your dream vacation home.