Do you dream of owning a vacation home in Orlando? What’s holding you back from making those dreams a reality? Could it be that you find the idea a little too intimidating? Believe it or not, it’s actually easier than you may think. You just need to keep a few things in mind before you make the commitment. Here are some things to consider to help you analyze your options.
1. Match housing choices to your lifestyle – Many people make the wrong assumption that you must own a primary residence before owning a vacation home. But that’s not a hard and fast rule you have to follow. The important thing to focus on is matching your housing choices to your lifestyle.
Perhaps you live in a big city and want a lot of space that is just not affordable where you are. Rather than buying a place in the city, you could rent a small condo and buy a large vacation home outside the metro area. One area of Orlando that fits this bill is Haines City, in nearby Polk County. This community features beautiful lakes and scenic hills, and is still within easy driving distance of the major theme parks and downtown Orlando.
On the other hand, you may want to live in a large home outside of the city, and still be able to enjoy the perks of big city life like public transportation, shopping, and nightlife. In that case, you could own your country home and buy a vacation condo in the city.
No matter what lifestyle you prefer, the financing and tax implications should be about the same.
2. Determine how you’ll use your vacation home – Since buying a vacation home is a major purchase, there are some financing and tax considerations to keep in mind, depending on how you intend to own and use your property. Here are three options:
- Primary residence – First-time home buyers can put as little as 3 percent down (if your loan doesn’t exceed $417,000). U.S. mortgage rates are still exceptionally low, and buying a home as your primary residence means you get significant tax benefits.
- Second home – If you’re financing an Orlando vacation home, you can use it any time you want, but lenders won’t let you rent the home. However, if you pay all-cash for your vacation property, you won’t have that restriction.
- Investment property – Many people who buy vacation homes choose to rent the home and use it when it’s not rented. If you’re financing the home, mortgage rates are typically slightly higher than second home rates, and your down payment usually starts at 30 percent. The tax advantages aren’t as great, but the extra rental income can help with affordability.
Buyers who live abroad and aren’t able to pay all-cash for a home might consider raising the money outside the U.S. This means that any purchase here in Orlando could be considered cash, which can save you thousands of dollars in bank-related closing costs.
3. Understand the costs of owning a vacation home – It’s important to factor in the costs of your primary residence and your vacation home to make sure you can afford the purchase. You will be responsible for utilities at both properties, as well as insurance, furniture and housewares. Other costs to factor in are travel costs to your Orlando vacation home, as well as the total cost of property maintenance such as cleaning, landscaping and pool upkeep.
4. Get assistance from a local realtor – It’s wise to find a local real estate agent who knows the area, especially if you plan to rent the home out to other vacationers. Certain communities in Orlando don’t allow short-term rentals. So if you’re not familiar with the area, it’s best to get guidance from someone with experience, like the agents at Team Donovan. We have an unrivaled knowledge of the vacation home market in Orlando, and are experts at working with absentee owners, buyers and sellers. Contact us today and let us help you find the perfect vacation home.