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Things to Consider When Buying a Vacation Home


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By Ellen Anderson, Pacific Union Senior Vice President/Regional Executive, Contra Costa County

According to an April 2017 report from the National Association of Realtors, were to use for vacations or as a personal and family retreat (42 percent), to use for future retirement (18 percent), and because of low real prices or good deals (12 percent). , 36 percent of vacation buyers purchased in a beach area, 21 percent purchased on a lakefront, and 20 percent bought in the country. 

A cabin in the woods, a condo in a city you love to visit, a seaside home with a view – a vacation home can be anywhere and anything you desire in a getaway. However, there are a few things you need to consider before making the leap. Buying a home is a big decision, whether it’s your first, second, or 10th property. A vacation home fits a specific need, so there are certain criteria and special concerns you should address before you move ahead with this exciting step.   

Location, Location, Location

Most importantly, you need to be absolutely sure about the location you choose for your vacation-home purchase. Do you know the area well? Have you visited several times? Are you sure you want to continue to return on a regular basis? This will be your home away from home. According to NAR, more than 80 percent of vacation-home buyers choose locations within driving distance of where they live. If you plan on buying a vacation home in a favorite faraway destination, that will come with its own questions. Who will be responsible for the security and maintenance? What is the plan in case of an emergency (like a water leak)? 

Rental Income

If you want a home that provides a source of income, make sure that you can legally rent your property. In the age of Airbnb and VRBO, the rules and regulations surrounding short-term rentals change frequently. For instance, South Lake Tahoe just tightened its in December. And in 2015, San Francisco worked with Airbnb on pioneering a vacation-rental law that requires all local hosts to register with the city. Make sure you do your research specific to the city/region in which you plan to buy a vacation home. If you do end up renting your property through a platform like Airbnb, the company will provide booking tools and payment-processing services, but you will still need to decide how to handle management such as cleaning and guest inquiries. Keep in mind that a property manager will charge a commission, which can be anywhere from 10 percent to 50 percent of the rental income.

There are also tax advantages to renting your vacation home. “If you receive rental income for the use of a dwelling unit, such as a house or an apartment, you may deduct certain expenses," according to . "These expenses, which may include mortgage interest, real estate taxes, casualty losses, maintenance, utilities, insurance, and depreciation, will reduce the amount of rental income that's subject to tax." Talk to your tax advisor for details. 

Other Expenses

A vacation home will have its own unique expenses. I already touched briefly on the expense of a property manager above. “A cheaper alternative to a property manager, especially if you don’t plan to rent out the house or will handle rentals yourself, is hiring a local housecleaner or handyman to maintain your vacation home,” . More good advice from the website: have a keyless entry system and assemble a list of local plumbers, electricians, and other maintenance-service providers. And don’t forget about cleaning costs if you will rent your vacation home. According to HouseLogic.com, a rule of thumb for calculating cleaning fees is to multiply the number of bedrooms and bathrooms combined by $20.

Local Hot Spots for Vacation Homes 

Pacific Union operates in some of the hottest spots for vacation homes in California. According to rented.com, Napa is No. 3 on the list of the . Also,  listed South Lake Tahoe No. 48 on its list of top summer 2017 vacation-home markets.  

Final Words of Advice

A Pacific Union real estate professional from our brokerage's Lake Tahoe region offers the following advice: “Pick a good, experienced, and local agent. An agent who lives full-time in the community in which you want to purchase a second home is going to be your biggest asset during the buying experience. That local person has knowledge of the local rules, regulations, and market dynamics with regards to pricing. It is also important to make sure they know all the local rules regarding rentals. They will know who to refer you to for ongoing maintenance once the sale has closed.”

It’s also extremely important to use a local mortgage broker, she adds, “because of the nuances of a second-home community, out-of-area brokers can be challenged with getting the job done.”

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