When it comes to building wealth and ensuring your future financial security, there are some investments that are almost always in your best interest. Owning a vacation home and renting it out can be a cornerstone of your financial plan. Consider the following factors to see how a second property can help you meet your financial goals.
Your Property Can Pay for Itself
If the mortgage payment, taxes, utilities and cleaning costs add up to a thousand dollars a month, rent your property for $1500 and watch it pay for itself. Once the mortgage is paid off, the rental fees can be socked away for another property, other investments or your retirement fund.
Diversity in Your Investments
It's never a good idea to put all your financial eggs in one basket. Many people invest heavily in their primary residence and then panic if its value dips. By owning two properties, you can feel more confident that one of them is bound to rise in value or retain its value. This is especially true if your vacation home is in a valuable location, such as a lake lot or beach front.
Pay Yourself for Vacations
When you rent a vacation home, you're paying someone else's mortgage or padding their retirement fund. By owning your own vacation home, you can 'pay' that rental fee into your own assets while still enjoying a beautiful, and familiar, vacationing spot. You can enjoy your vacation knowing that you're not losing ground on your long-term financial goals.
A Vacation Home Serves as Emergency Shelter
If your primary residence caught fire tomorrow, where would you house your family while you wait for an insurance payout? If a loved one needed a place to stay but your house is full, how would you help them? A second property can serve as a backup shelter in cases of emergency, especially if your vacation home isn't too far from your primary house. When the alternative is a pricey hotel or imposing on friends and family, you'll be glad you have a second home.
While primary residences can sit on the market for months or years, vacation houses can usually be sold quickly if a huge financial need arises. Whether it's an enormous medical bill or your child's college scholarship falls through, having a liquid asset you can sell if you had to can bring you a lot of peace of mind.
Owning a vacation home and renting it out is an excellent plan for your future. Not only can it pay for itself, there are many other perks to owning a second property.
About the Author: Brian is guest contributor from Seaside Vacations, vacation rental company that features quality North Myrtle Beach vacation rentals.