“Thinking of buying a condo for your next summer vacation?”
A second home has numerous life-enriching benefits, it provides you with a place to spend time with friends and family and create memories that you will find extremely important to make time for.
However, just as planning a vacation takes time and consideration, purchasing a condo for your summer vacation can be a daunting task.
But you don’t have to worry about the how-to’s because, in this article, you will understand that buying a condo is a practical and lucrative move that sets you up for future financial success and a good haven for your summer getaway.
Why Should You Purchase A Condo?
A condominium or condo is a housing complex where each unit is individually owned. Attached and detached condos are available, with detached condos lacking shared walls and attached condos sitting inside connected units.
Buying a condo has its advantages, as they are typically less expensive than single-family homes and are often located in more desirable areas, such as city centers.
Aside from price and location, there’s also a sense of security that comes with owning a condo, thanks to something called a homeowners association (HOA). Depending on the complex, condo owners are responsible for paying monthly fees to their condo association for things like exterior maintenance and additional amenities like access to pools or dog parks.
Although buying a condo means paying a little more per month for these fees, for some buyers, not having to worry about landscaping and snow removal may be well worth the cost.
The Pros Cons Owning a Condo for Summer Vacation
When considering purchasing a vacation rental property, several advantages exist.
Earn Extra Money
Converting a condo into a vacation rental generates additional income. People who want to make money can turn their condos into vacation rental properties. Some platforms, such as Airbnb, make it simple to list properties online and attract new customers.
The house will require a few furnishings and will be ideal for customers to visit and stay in. Some people have embraced the concept, and it is paying them well. A high tourist traffic area is ideal for establishing a vacation rental condo.
Growth in Equity
A vacation rental can be an excellent way to secure a secure financial future. Property values in real estate tend to rise over time. A vacation home is no exception. If the economy allows it and inflation continues to climb, the value of your investment property may rise over time as well. Consider investing in upgrades and amenities that will attract visitors and increase your appreciation. When the time comes, you can profit from the sale of your home.
A Family Vacation
Owning a vacation home provides a getaway location that you can use whenever you want and where you can store your belongings (no heavy suitcases needed).
Families occasionally buy property near a college or university for their children’s use. Remember that you may lose rent every time you utilize the property, especially if you only wish to visit during busy hours.
You may spend vacations elsewhere if you become bored with vacationing in the same location. This can be an equal trade-off if your rental is full, but if you spend more on adventures than you earn on your rental, you may have cash flow issues.
Staying in Davao City should be on everyone’s trip bucket list because of its rich culture, stunning beaches, respect for native tribes, and tasty food. You can’t go wrong with this.
A Potential Retirement Residence
While you are still working, investing some of your money in a summer vacation home could help you ease into retirement in a new location without making a large investment. If you buy a summer vacation home while still working, you can pay off the mortgage with the money you make from renting it out when you’re not using it.
When the time comes to retire, you can sell your primary residence and invest the proceeds in a move to your summer vacation home. That investment could be paying down or off your vacation home’s mortgage or modernizing it to fit your lifestyle.
Deductions for Taxes
You must pay income tax on any profits you make. You won’t be able to take deductions if you don’t rent it, but you won’t have any extra income to pay taxes on, which can be crucial if you’re about to enter a higher tax bracket.
Because renting out your vacation home is a business, you may be able to deduct business-related expenses such as maintenance and repairs. Here is a list of possible deductions: hosting fees for sites such as Airbnb and Vrbo, housekeeping, utility bills, guest supplies, property management fees, occupancy taxes, insurance premiums, and mortgage payments.
Cons of Buying a Condo for Summer Vacation
It’s common to hear people complain about how much of a hassle a vacation rental is, but it’s best to weigh the benefits and drawbacks for yourself.
Some breakages will occur in a home that has been converted to a vacation rental. It is critical to account for breakages. Some people will cause damage to various parts of the house due to carelessness. More frequent renovations will necessitate the owners’ attention.
Renting a property entails dealing with renters, negotiating contracts, collecting payments and damage deposits, paying taxes, and managing potential liability. Most people employ an attorney and a tax preparer to assist them with the purchase and taxes.
You’ll need a homeowner’s insurance policy that covers potential renter injuries and property damage. Many second homeowners engage a vacation rental firm to advertise the property, screen renters, manage contracts, and inspect for damage (for a fee of 10 to 50% of the rent). You can manage this yourself if you are in the area and feel comfortable putting in the time required, but it will take a lot of effort and attention.
Have an emergency plan in place if you handle rentals on your own.
Additional Taxes and Fees
A vacation rental home will incur additional taxes and fees. In some places, people are expected to go above and beyond and pay additional fees to operate condo rental services. Some people may be unwilling to pay the fees. It will be simple to save money if the fees are considered before using vacation rental services. Vacation rentals can attract a lot of taxes in some cases. Before booking a vacation rental, consider the taxes.
The time required to perform daily maintenance can be too much for family members. They may be forced to hire someone to do the upkeep, which will incur additional costs on the part of the family members. Every day, for example, the bedding and various parts of the house will need to be cleaned. The upkeep issue can sometimes become too stressful, interfering with people’s daily activities at home. Before making an informed decision to try the business, weighing the pros and cons of buying a condo for summer vacation is critical.
Some people feel that having a vacation house raises stress levels since they now have to manage and pay for two residences. Renting the property can add to the complications. You’ll need to assess your suitability for the situation.
Is it Worth it to Buy a Condo in the Philippines?
The answer to that question is dependent on your situation. If you want to live and intend to stay in the country for an extended period of time, purchasing a condo can be a greater way to gain instant equity while also having a place to call home. However, if you’re only interested in purchasing as an investment, you should conduct more research into current market conditions before making any decisions.
Whatever path you choose, always an experienced real estate agent who can help guide you through the process and answer any questions.