Part of the American dream is to own a second home where your family can gather on holidays or retreat to on weekends. Many Americans aspire to retire to the mountains, beach, lake, or desert oasis. However, most likely, when considering buying a vacation home, most quickly dismiss the idea because they think that there's no way they could possibly afford it. Well, guess what? Maybe they (and you) can.
When deciding where to buy a second home, many potential buyers look to the vacation spots-- areas that are often beachfront, lakefront, or mountaintop. These are areas are typically pricey, due to supply and demand-- there's only so much property on the beach, lake, etc. However, if you make the decision to rent your property out when you're not using it, you should be able to easily cover your mortgage payments.
Vacation rental expert Christine Karpinski weighed in on this topic in her recent podcast, Intro to Vacation Rentals. 'I tell people that the best thing to do is to determine your affordability factor. Figure out how much you can spend out of your pocket each month for your second home,' she says. 'If you have a disposable income of $2000 each month, you could afford a $200,000 home or you could afford a $4000 a month property if you factor in rental revenue that will help offset the cost,' she goes on to say.
She explains her simple formula for determining if you can afford a vacation property, 'If your mortgage payment is less than or equal to one peak week that you can rent your property for and you can rent that property for 17 weeks a year then that property will break even.'
If you do your research and commit to renting your vacation property by owner, your dream vacation home is within your grasp.
