If you've ever dreamed of owning a cabin in the mountains of somewhere like rural North Carolina, you've also probably had a few reservations. What's stopping you? Are you waiting until you have more in savings, or for the golden years of retirement?
If you answered "yes" to either of those questions, you may be surprised to learn that vacation homes are very manageable even without those things. In fact, here are a few reasons why the best time to own a vacation home is now.
You can get other people to pay for it
With sites like VRBO and Airbnb, it's possible to rent your vacation home out to guests while you are not staying there. People rent out their basements, spare rooms, or vacation homes, sometimes even turning a profit. The key is finding a property in a popular location where people like to stay, and investigating average rental rates in the area. Do a little digging before you buy, so that you have a good idea of how much you can make. Then find a property with a mortgage that is less than your projected monthly rental income. With the right home in the right location, you could possibly pay off your primary residence at the same time.
You get some tax breaks
Homeowners are allowed to deduct mortgage interest on homes that they own up to a certain amount. And this includes second homes. Additionally, home equity loan interest can be deducted if it's used for renovations. This does come with a few exceptions, however. For example, you can only rent the home out for 14 nights a year without reporting it to the IRS. But even if you do rent it out for more than 14 days, as long as you stay in it more than 14 days yourself, you can still take the deductions. You just won't be able to report rental losses.
You'll be prepared for retirement
Why wait until you're 65 to enjoy a home away from home? Who knows what the future holds? Think of the people who own those cozy NC mountain cabins? They're nestled by their fires at Christmas with their little ones sleeping in the next room. That could be you. And just think of how much you'll have paid off by the time you do retire. You could take the proceeds from your primary residence and stick it in your 401k instead of spending it on a mortgage.
You'll have more home equity
Your second home is an investment in more ways than one. Owning a second home only gives you more equity and increases your portfolio. And if you're smart with your mortgage loans, you could come out ahead if you ever sell your properties.
You'll have an escape
Most of us know that stress is a growing epidemic. But what you may not know is that workplace stress is the biggest source of stress in America. Statistics show that almost half of everyone who reported trouble with anxiety attributed it to their jobs. In fact, in some major cities around the US, police officers are automatically compensated for coronary issues because they're assumed to be work-related. So aside from all the financial benefits owning a second home can offer you, consider also the health benefits of having a relaxing place to unwind.
If you've been thinking of taking the leap and buying a second home, there are plenty of reasons not to wait. You can increase your financial portfolio, have a relaxing getaway for family and friends, and possibly even get it paid for with rental proceeds.
