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6 Things to Consider Before Buying a Vacation Home

Austin, Texas, the state’s capital, is a vibrant and thriving city well-known as the Live Music Capital of the World. This beautiful city offers over 326 square miles of live music, shopping, dining, and unique pocket neighborhoods that help create the vibrant, awe-inspired lifestyle the area is known for. Austin is perfect for those who want to live in an area that is equally energetic and artsy as it is serene and welcoming.

The various neighborhoods offer stunning outdoor spaces to explore lakes, trails, and scenic natural wonders. Austin real estate combines contemporary and traditional homes with luxurious ranches and estates. Whether you’re new to Austin or want to purchase a second home, there are numerous real estate options available, including vacation homes.

Buying a vacation home is a dream investment, but it’s also a major decision and requires careful consideration. Second homes have countless benefits, such as creating new memories with loved ones and enjoying a home away from home. Like any home purchase, purchasing a vacation home takes careful planning.

Weigh the pros and cons

You might be swept away by the exciting notion of purchasing a vacation home, but it’s important not to get too carried away. Before buying, you’ll want to consider the pros and cons of purchasing a vacation home.

Pros of a vacation home

Extra income

You can rent your vacation home out when you’re not using it. This could be a great way to increase your passive income.

It’s an investment

In addition to rental income, like all properties, your vacation home will appreciate over time. In highly desirable areas with a growing market demand, such as Austin, vacation rentals will experience an exponential increase in value.

It saves money on vacations

Instead of spending money on hotels and other short-term rentals, you’ll save that money by taking a trip to your vacation home.

Tax benefits

There are various tax advantages to those who own a second home, including deductions on property taxes and mortgage interest. Speak with a tax professional to discuss your vacation home taxes.

You can use it to retire

Depending on your chosen location, a vacation home might be an excellent place to plan for retirement.

Cons of a vacation home

It’s costly

You’ll have to pay the mortgage, insurance, property taxes, and utilities like your primary mortgage. Having to pay double each month can become difficult to manage over time.

Unexpected expenses

There are always unexpected expenses when owning a home, whether it’s your primary or vacation home. You’ll need a cash reserve ready for emergency repairs or routine maintenance. This is especially true if you intend to rent your home to vacationers.

Crunch the numbers

Anyone purchasing a vacation home should establish clear financial goals from the start. Do you want your vacation home to produce income or simply cover the home costs? How often do you intend to use the home or allow family and friends to visit? If you plan to rent it out, will you hire a full-service manager or want to be responsible for managing it yourself?

Remember, you’ll be paying two mortgages and double the cost of utilities. You’ll want to factor in homeowners association fees, maintenance costs, required landscaping, and surprise monetary setbacks that might pop up later. While your vacation home can bring in additional income, you must also be careful about renters and vet them carefully.

Is now a good time to buy a vacation home?

This answer will differ for everyone, and there are several factors that play a critical role in whether or not now is a good time to purchase a vacation home. Austin’s current market is one substantial component that can make a huge difference in whether your answer is yes or no. How does the current market look? Have home prices begun to fall due to rising interest rates? Has there been a decrease in available homes?

Don’t feel obligated to make an offer on a vacation home just because it’s within your price range. Buying any home, especially a vacation home, is a significant financial investment, so speak with your financial advisor and a real estate professional before deciding.

Think about the down payment

Second homes can be alarming to lenders, as it’s usually more difficult to make monthly payments on two homes versus one. This means your down payment might need to be substantially higher. You may have to pay at least 25% for your second or third property, especially if the home value is significant. You can pay less if your credit score, debt-to-income ratio, and the rest of your application are in excellent standing. This is why having your financing in place is so important before beginning your home search.

Explore rental income options

Vacation homes can easily be turned into short-term rentals, which will bring in income and help reduce the cost of your second home. Remember, while renting a house is an excellent way to reduce costs, some hassle is involved, and any income received may fluctuate.

Test your assumptions

While vacation homes can be rented to generate income or reduce costs associated with homeownership, it’s not a reason to purchase a vacation home. Short-term rental markets can be competitive, and with other vacation homeowners trying to attract tenants, your projected income might not always pan out. The same can be said when using your vacation home as an investment. While it’s possible, there are various costs to owning a second home.

This doesn’t mean you shouldn’t purchase a vacation home. It simply means you should analyze every detail before making a decision. It’s possible that you can buy a vacation home without any substantial challenges, and if you feel you will get a lot of use out of the home, you should strongly consider it.

Are you ready to search for your vacation home?

If you’re ready to search for your next vacation home in Austin, connect with a trusted real estate agent like Samantha Midler today to get started on your journey. With plenty of experience and a genuine desire to connect with her clients, Samantha is the perfect guide to help you reach your lifelong goal of owning a vacation home.


Finding a place to take root can be complicated, and the home buying and selling process doesn’t always feel enriching or supportive. I can support you in navigating the Austin real estate market to find the perfect home where you can flourish! What do you say? Ready to take that next step?

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