There are quite a few things to take into account in order to make the vacation home buying experience a happy one.

Duane Duggan, Realtor and Author RE/MAX of Boulder

Brrrrrr! Last week’s temperatures dropped below the zero-degree mark! There is nothing like a zero-degree day to get you thinking about soaking in sunshine at the beach. Over the years, I have had the opportunity to refer many of my clients to Realtors® in the beach towns where they want to buy a vacation home. I have learned that Colorado folks like to vacation in warm island locations where they can bask in the sun.

Typical homeowners have likely purchased a personal residence or two – and maybe a few investment properties – in their lifetimes. Later, they may think of finding a permanent place for the family to gather in a vacation setting. In fact, the Baby Boomers have been buying second homes at a record pace as they reach their retirement years.

Nevertheless, there are quite a few things to take into account in order to make the vacation home buying experience a happy one.

Goals for the home
Families need to ask themselves many questions as they dive into considering the purchase of a vacation home. Goals can be immediate, such as the number of days of personal use – or whether or not the property is going to become a legacy family vacation property to be handed down to the next generation.

Here are a few questions to help you decide in Part 1 of my two-part series about buying a vacation home.

Is rental income needed to financially support the purchase of a vacation property?
Even if someone pays cash for a vacation home there will still be several expenses. Those expenses include taxes, insurance, maintenance and landscaping, property management and homeowners association fees. With a mortgage on top of that, most people will need to rent out the property for some income to cover these expenses, especially in the early years of ownership.

If rent is needed, will you manage the rental or hire a professional manager?
Some people choose to rent out their vacation properties by themselves by relying on a variety of online websites. If you want to do this, you will need to investigate local municipalities and homeowners association rules for short-term rentals because there can be many types of restrictions, occupancy limits, fines for violations — and even prohibition. If you want to rent and manage the property yourself, you will need to evaluate your ability to: market your property, clean it after every guest stay, and repair and maintain it, especially if your property is located outside of driving distance.

In most resort areas, professional vacation property managers are available. They can market your property and put it into a rental pool. This enables you to keep your property rented on a short-term basis from a distance and with no personal involvement. These managers can guide you on pricing and tell you the average number of nights per year you might expect to rent out your property. You can pick the days that you would like to schedule for personal use. For example, you might have to decide if you want to use the home yourself over the holidays or rent it out during the holidays for premium rates and maximum returns.

With longer term rentals you will have higher expenses for management, linens, and cleaning, whereas daily rentals might bring in higher income depending on the season and number of nights booked. The advantages of a longer-term rental are consistent income and less turnover and paperwork.

In addition to marketing, vacation property managers can also handle cleaning and garbage; security; damage repair; maintenance including landscaping, pool cleaning, snow removal; guest emergencies; and even restocking linens, soap and paper towels. However, when choosing a vacation property manager, you should keep an eye on fees and contract terms. Fees can be 20 to 50% of rental income.

As you can see, there are many details to consider when buying a vacation property. In my next article on this topic, I will cover taxes, financing, succession plan, and more. As you mull over the idea of purchasing a vacation home, I recommend that you pull together a team that includes a mortgage loan officer, tax accountant, financial planner, property manager, insurance agent, Realtor – and possibly an estate planning lawyer – to consult with.

By Duane Duggan is an award-winning Realtor® and author of the book Realtor for Life. He has been a Realtor for RE/MAX of Boulder in Colorado since 1982 and has facilitated over 2,500 transactions over his career. He has been awarded two of the highest honors bestowed by RE/MAX International: The Lifetime Achievement Award and the Circle of Legends Award. For questions, email [email protected], call 303.441.5611 or visit