« Buying A House | Home | Motivated By Money »
Vacation House
By peace | September 4, 2007
Look at these houses. They are so beautiful. They are our dream houses. Not many people in this world get to live in such houses. The only time some people can get to stay in such houses might be during their vacation when they rent them. For example, Goin2Travel which has Myrtle Beach vacation rentals and other vacation rental by owner as well. If I have money, I would want to stay in such dream houses too. However, with no money, renting Lake Tahoe vacation homes are not a bad idea too.
A vacation house that comes close to carrying itself is a dream property. It is always on tap for your own weeks off and the renters help you pay the bills. But a house like that is not a true investment. There is more pleasure than profits. The amount of rent is not enough to cover the expenses. Most of the time, the property owners need to fork out some of their pocket money. If property values rise, the house might make money afterall. To measure up as a good investment, the sale price of the house has to be large enough to cover up the annual losses plus interests.
Like a first home, a second home does double duty. It’s a place to live and has elements of an investment. It forces you to save and usually gives you more borrowing power. It costs you money as long as you own it, but you hope to sell for more than you paid. On the downside, you’ve made a costly purchase that probably can’t be sold in a hurry. You may lose money if your resort suffers a real-estate slump. When you own two homes, you need the protection of cash in the bank to pay the mortgages just in case your income stops. If you’ve tapped all your cash to buy the house, make it your top priority to build up that reservoir again.
