Thursday, June 25, 2020

Are Vacation Homes a Good Investment?

If you haven’t been thinking about a second home or an investment property yet, this year has been bringing it to everyone’s attention. This brings a big question to the forefront, though, are vacation homes a good investment? Let’s take a look at some of the reasons a vacation home can be a great investment and a few things you will want to be aware of as you start to make these big decisions.

Investment Property vs. Vacation Property

One of the first things you need to figure out when deciding if a vacation home is a good investment is how the property will be used. An easy way to think about it is that a vacation property will primarily be used for your enjoyment. You can still rent it out occasionally should you want to, but there is a limit on how many nights it can be rented before it becomes an investment property. Investment properties are purchased with the intent to make money. You may still vacation in your investment property, but its primary function will be to provide a place for others to stay and for you to earn an income.

Once you decide what your intention with the vacation property at Lake of the Ozarks will be, you can now start to look at the advantages versus realistic expectations.

The Advantages of Owning a Vacation Home

If you have been to Lake of the Ozarks several times, you realize quickly what an amazing place it is, which may spark your interest in owning a vacation home here. Here are a few perks that come from owning a vacation home at Lake of the Ozarks!

You can write off a lot of your expenses - The specifics of what can be written off need to be discussed with your accountant or tax professional, but there are several items such as mortgage interest, mortgage insurance, depreciation, etc.)

You can make an extra income - if you use this property as an investment property, you can take advantage of the additional revenue stream that it can bring. This will depend on the time of year and location, obviously, but it can certainly be a lucrative step if you play your cards right.

You have a ready-made vacation destination - if you love vacationing at Lake of the Ozarks, it could be a really easy decision for you to get a vacation home here. You will easily have your own getaway spot, whether that is for personal vacations or as a place to host parties, friends, a family reunion, and more.

You have a potential retirement home - this is also a common reason and advantage to buying a home in a vacation destination. Not only will you have a nice little nest egg, but you will also have a place to retire to if you so wish. Vacation homes are considered a great long-term wealth investment, and even if you decided to sell the home later and use the cash to cover your retirement plans, you would be winning.

Realities to Be Aware Of

Obviously, with any new endeavor, there will be aspects of it that require more effort or could put you out a bit. Owning a second home, whether a vacation home or an investment property is going to require some additional time and resources from you - and you can’t determine that this is going to be a good investment without being aware of them.

Property management - One thing to consider when purchasing a second home, especially an investment property, is who will manage it. Either you will be making trips to the Lake after every guest to clean up and fix repairs, or you can hire a short-term rental property manager to care for your place. The average charge for a short-term rental property company is 15-40% which can eat through your extra income pretty quick.

You will have to find your own clients - unless, as mentioned above, you go through a property manager, you will have to market your vacation rental strategically on your own. This can include listing your home on the most popular platforms, making it look beautiful through staging, and even running occasional discounts.

You will need to afford the additional mortgage - it is said that if you can’t afford to pay the mortgage without the renters, you may not be ready for the investment. Having an additional mortgage on a Lake of the Ozarks home is going to be an additional responsibility. Not to mention all of the other costs and fees that are tied into owning an additional home.

Ready to Invest?

Whether you are aiming to make a good investment financially or emotionally - owning a vacation home at Lake of the Ozarks can be an awesome next step in your life. 2020 has been THE year for interest rates and home loans, so if you’ve been pondering the purchase, this is the year to make that investment and lock down an amazing rate.

If you still aren’t sure whether a vacation home is the right investment for you, it is said that 11% of the mega-wealthy consider real estate to be one of the top ways they made their fortunes. In fact, of all of the ways these ultra-rich individuals made their fortunes, real estate outpaced everything else 3 to 1. If you’re ready to make the investment, Team Lasson is ready to assist! Visit our website to submit an application and we will be in contact with you soon to get your pre-approval rolling.

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Michael Lasson
Senior Loan Officer
NMLS #: 493712

4655 B Osage Beach Parkway
Osage Beach, MO 65065






**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

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