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Lydia Mansel
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Real estate experts share the top things to keep in mind when buying a vacation home.
:max_bytes(150000):strip_icc():format(jpeg)/TAL-lead-image-VACAYHOUSEMISTAKE0926-c84777b3ca7041d88512678e1c043f13.jpg "Exterior of a beach house in Florida.Credit: Kristina Blokhin/Adobe Stock")
Exterior of a beach house in Florida.
Credit: Kristina Blokhin/Adobe Stock
If you’ve ever been on vacation and found yourself scrolling through Zillow listings, seriously considering purchasing a slopeside condo or a beach house, this one’s for you. Sure, the idea of potentially generating passive income from a vacation home—or simply having a getaway of your very own—is tempting, but it’s also a significant undertaking. The biggest factor is the financial side, but you also need to consider location, maintenance needs, and local regulations.
So before you make an offer, make sure you’re doing your due diligence and think beyond the purchase price. To help you out on that front, we spoke with three real estate experts from across the country and asked them to share the top mistakes buyers can make when buying a vacation home.
House keys sitting on a wooden table.
Credit: Klaus Vedfelt/Getty Images
For many buyers, buying a vacation home is part of a larger plan to bring in rental income. But before making an offer, you’ll want to make sure the property can legally be rented—and that there’s real rental demand in that market.
“Short-term rental regulations should be reviewed thoroughly prior to making an investment. In my market, any existing short-term rental licenses don’t transfer with the sale from one owner to the next,” Justin Black, a real estate advisor with LIV Sotheby’s International Realty, tells Travel + Leisure. “This means that if a buyer is looking to offset costs by renting the property on a short-term basis, they must properly review current regulations to ensure new licenses are available for the property specifically. Local regulations are always changing town to town and county by county.” He also recommends reviewing historical revenue figures (if the property has been rented before) or requesting revenue projections from a local property management company.
Daniel Amodeo, president of Amo Realty, also suggests being realistic about potential rental income. “Rental income projections can look great on paper, but there is never a guarantee that the property will continuously stay occupied. Buyers should plan for the possibility that the home could sit empty for weeks or even months and make sure they can still afford the carrying costs,” he says, noting that there “can also be issues with renters paying rent on time (or at all).”
You may love the idea of buying a slopeside vacation home in a popular ski town, but winter lasts only a couple of months. For the best chance of earning year-round income, choose a destination that draws visitors in every season. “A house can feel perfect in July or August, but what does it feel like in April, October, or January—or during hurricane season? The strongest second-home investments are often places people want to use, and potentially rent, beyond the obvious peak weeks,” says Nastassja Balick-Coppers, founding partner at Decode Real Estate.
A “For Sale” sign hangs in front of a house.
Credit: Grace Cary/Getty Images
Some buyers purchase vacation homes to rent out; others seek properties for their exclusive use. If you fall into the latter category, Amodeo still recommends considering a variety of resale factors. “It’s easy to fall in love with a vacation home and assume that you’ll never sell it. The reality, however, is that circumstances change. A property that’s perfect for you right now might have limited appeal to other buyers,” he says. “Location, accessibility, parking, bedroom count, and year-round appeal can all make a really big difference when it eventually comes time to sell.”
Balick-Coppers offers a similar take. “Before spending heavily on finishes, think about who will eventually buy or rent the house and what they will actually value. An additional bedroom, pool, privacy, or great outdoor space can often create far more value than an extraordinarily expensive kitchen or bathroom,” she says.
Whether it’s your first time buying a home or you’re a seasoned pro, you should have your ducks in a row before making offers and signing contracts. “I’d recommend buyers spend a sufficient amount of time getting their financing lined up prior to starting their search. Buyers often fail to realize that financing a second home varies significantly from purchasing a primary residence,” says Black. “Second home and investment loans typically carry higher interest rates, larger down payment requirements, and stricter qualifications.” His advice? “Consult with [your] mortgage brokers early and thoroughly to avoid any surprises.”
Reviewing a contract.
Credit: Kmatta/Getty Images
That monthly payment estimate you’re seeing on Zillow? It might not be completely accurate. It may not include all costs—including insurance and homeowners association (HOA) fees. “Another mistake that I’ve seen buyers make in the past, and that is timely in our current market, is not giving enough diligence to reviewing HOA financials and insurance costs,” says Black. “Insurance premiums have rapidly increased across the country, especially in areas that are at higher risk of wildfires and hurricanes.”
“This is especially true when a property is a part of a homeowners association and the dues cover the property insurance, specifically for condos and townhomes,” he continues. “When the dues are covered by the HOA, the HOA needs a much larger policy than a standalone single-family home would require. These policies often cover 30 to 100-plus units, which reads as more risk to the insurer. I’ve seen HOA dues double upon policy renewal, which turns what buyers expected to be a fixed cost into a real variable.”
If you’re buying a vacation home in a different state (or country), you’ll want boots on the ground. But before you decide on a property management company, Amodeo recommends doing your research. “Buyers should vet management companies very carefully,” he says. “Many management companies have reviews from tenants, but you should be looking for reviews from other property owners.”
And if you think you can handle the job on your own? You could be making a big mistake. “If you’re hundreds or thousands of miles away, you’ll likely need someone who can respond quickly if something goes wrong,” Amodeo explains. “This can be especially important in areas prone to hurricanes, flooding, severe storms, or other weather events, where you might need someone to check the property or coordinate repairs on short notice.”
Exterior of a beach house in Florida.
Credit: Kristina Blokhin/Adobe Stock
If you’ve ever been on vacation and found yourself scrolling through Zillow listings, seriously considering purchasing a slopeside condo or a beach house, this one’s for you. Sure, the idea of potentially generating passive income from a vacation home—or simply having a getaway of your very own—is tempting, but it’s also a significant undertaking. The biggest factor is the financial side, but you also need to consider location, maintenance needs, and local regulations.
So before you make an offer, make sure you’re doing your due diligence and think beyond the purchase price. To help you out on that front, we spoke with three real estate experts from across the country and asked them to share the top mistakes buyers can make when buying a vacation home.
Mistake No. 1: Not Reviewing Regulations Around Rentability
House keys sitting on a wooden table.
Credit: Klaus Vedfelt/Getty Images
For many buyers, buying a vacation home is part of a larger plan to bring in rental income. But before making an offer, you’ll want to make sure the property can legally be rented—and that there’s real rental demand in that market.
“Short-term rental regulations should be reviewed thoroughly prior to making an investment. In my market, any existing short-term rental licenses don’t transfer with the sale from one owner to the next,” Justin Black, a real estate advisor with LIV Sotheby’s International Realty, tells Travel + Leisure. “This means that if a buyer is looking to offset costs by renting the property on a short-term basis, they must properly review current regulations to ensure new licenses are available for the property specifically. Local regulations are always changing town to town and county by county.” He also recommends reviewing historical revenue figures (if the property has been rented before) or requesting revenue projections from a local property management company.
Daniel Amodeo, president of Amo Realty, also suggests being realistic about potential rental income. “Rental income projections can look great on paper, but there is never a guarantee that the property will continuously stay occupied. Buyers should plan for the possibility that the home could sit empty for weeks or even months and make sure they can still afford the carrying costs,” he says, noting that there “can also be issues with renters paying rent on time (or at all).”
Mistake No. 2: Buying for Peak Season
You may love the idea of buying a slopeside vacation home in a popular ski town, but winter lasts only a couple of months. For the best chance of earning year-round income, choose a destination that draws visitors in every season. “A house can feel perfect in July or August, but what does it feel like in April, October, or January—or during hurricane season? The strongest second-home investments are often places people want to use, and potentially rent, beyond the obvious peak weeks,” says Nastassja Balick-Coppers, founding partner at Decode Real Estate.
Mistake No. 3: Not Thinking About Resale
A “For Sale” sign hangs in front of a house.
Credit: Grace Cary/Getty Images
Some buyers purchase vacation homes to rent out; others seek properties for their exclusive use. If you fall into the latter category, Amodeo still recommends considering a variety of resale factors. “It’s easy to fall in love with a vacation home and assume that you’ll never sell it. The reality, however, is that circumstances change. A property that’s perfect for you right now might have limited appeal to other buyers,” he says. “Location, accessibility, parking, bedroom count, and year-round appeal can all make a really big difference when it eventually comes time to sell.”
Balick-Coppers offers a similar take. “Before spending heavily on finishes, think about who will eventually buy or rent the house and what they will actually value. An additional bedroom, pool, privacy, or great outdoor space can often create far more value than an extraordinarily expensive kitchen or bathroom,” she says.
Mistake No. 4: Not Spending Enough Time Preparing Your Financials
Whether it’s your first time buying a home or you’re a seasoned pro, you should have your ducks in a row before making offers and signing contracts. “I’d recommend buyers spend a sufficient amount of time getting their financing lined up prior to starting their search. Buyers often fail to realize that financing a second home varies significantly from purchasing a primary residence,” says Black. “Second home and investment loans typically carry higher interest rates, larger down payment requirements, and stricter qualifications.” His advice? “Consult with [your] mortgage brokers early and thoroughly to avoid any surprises.”
Mistake No. 5: Not Having an Understanding of the Final Costs
Reviewing a contract.
Credit: Kmatta/Getty Images
That monthly payment estimate you’re seeing on Zillow? It might not be completely accurate. It may not include all costs—including insurance and homeowners association (HOA) fees. “Another mistake that I’ve seen buyers make in the past, and that is timely in our current market, is not giving enough diligence to reviewing HOA financials and insurance costs,” says Black. “Insurance premiums have rapidly increased across the country, especially in areas that are at higher risk of wildfires and hurricanes.”
“This is especially true when a property is a part of a homeowners association and the dues cover the property insurance, specifically for condos and townhomes,” he continues. “When the dues are covered by the HOA, the HOA needs a much larger policy than a standalone single-family home would require. These policies often cover 30 to 100-plus units, which reads as more risk to the insurer. I’ve seen HOA dues double upon policy renewal, which turns what buyers expected to be a fixed cost into a real variable.”
Mistake No. 6: Choosing a Bad Property Management Company, or Assuming You Don’t Need One
If you’re buying a vacation home in a different state (or country), you’ll want boots on the ground. But before you decide on a property management company, Amodeo recommends doing your research. “Buyers should vet management companies very carefully,” he says. “Many management companies have reviews from tenants, but you should be looking for reviews from other property owners.”
And if you think you can handle the job on your own? You could be making a big mistake. “If you’re hundreds or thousands of miles away, you’ll likely need someone who can respond quickly if something goes wrong,” Amodeo explains. “This can be especially important in areas prone to hurricanes, flooding, severe storms, or other weather events, where you might need someone to check the property or coordinate repairs on short notice.”