Deciding if you should keep or sell your vacation home or property can be a difficult decision. You may need the money out the property. You may miss the family memories created at the property. You may just feel overwhelmed figuring out the best time to sell.
I do work with clients who are looking at selling lake lots, vacation homes and other recreational properties. When we start the conversation, it usually starts with a simple question. Can you still afford, and are able to take care of the property?
If you are needing the money from the property, then the sale must happen to help you manage your finances. You can skip this next couple paragraphs, as you already know you have to sell.
3 Options if You Aren’t Ready to Sell
If you are no longer able to maintain the property because you aren’t out there as often, you can’t physically enjoy or it is too much to maintain the property, then it is time to ask a couple more questions. Let me guide you through if you should consider selling your vacation property.
1. Passing it down to family? If you intend for the property to be passed down to other family or friends, now is the time to have those conversations. Will they simply inherit the property now? Will they pay for a the property? You may want to speak to your lawyer and financial planner to best plan this move, as there will most likely be financial implications for both you and your family member.
2. Do you intend to rent it? Depending on the property and demand, some look at turning their vacation property into a short term or long term rental. In many counties, this now makes your property a business instead of a leisure property. Be sure to research both business permits, laws and area regulations that may affect this rental. Also be sure you have the financial ability to do repairs and purchase replacement appliances if anything gets destroyed by users. Know your insurance costs and understand how offering a rental could affect your insurance packages and costs. Rentals can be a good option as long as you have the ability to manage the renters and cleaning and such, or can afford to hire a property manager to look after it for you.
3. If you aren’t passing along the property to others, and you don’t want the liability of renting it…then your only other option is to keep it or sell it. This is solely a decision you need to make.
Benefits of Selling a Vacation Property in 2020
Although it’s been a different type of year, sauvy people are seeing the benefits to the selling their vacation property at this time.
1. Many people did not like being pent up in their home for self-isolation, and are looking for a vacation property for any future needs. Whether they are looking for a lake to haul their trailer to, or a cabin in the woods, or a beautiful lake front estate – people want choices! Those with stable income or those with investment money, are looking at alternative options allow them to have more space or simply be able to change the scenery from time to time.
2. Many people are downsizing their homes. They may feel that they can’t afford the larger mortgage payments or they want a more simple life. When they successfully downsize, many are showing interest in a second small investment property – and chances are many will choose a vacation property.
3. As the economy shifts, I expect by the end of the summer, many will have to sell their vacation property due to loss of jobs and needing to reduce debt. Getting on the market early allows you to benefit to sell while there is lower inventory and being sold while buyers could still enjoy the summer. Waiting until the fall, will mean more competition, less people thinking of a vacation property just because of the time of year, and running the risk of falling prices due to high inventory of vacation homes.
4. By selling your vacation property now, you can invest while the markets are low. By accessing that equity in your vacation property, you can put that money back into investments and watch it grow over the coming years. It’s always a great time to invest while the markets are low. This is a perfect opportunity for those that want to add their vacation home property to their retirement savings plan.
5. If this is not the right vacation property for you, it’s a great time to sell and buy something more suited to you. Whether you want something smaller, easier water access, less stairs, better home, different location – now is the time. Sell this summer, and then start watching for the right vacation property for you. Come the fall and winter you may see more options and be able to purchase at a lower price and be ready to enjoy your vacation property next year.
Deciding to sell isn’t always an easy process. But once you have a sense of your overall goal, the decision gets easier. So focus on what you want – the money out, pass along to family, create new memories on a new property – you will get a sense of what is best for you.
If you are thinking of selling your vacation property, I’d love to have a chat and review what selling could look like for you now or in the near future. Whether you are selling now or planning for the future, I’m happy to connect further with you and help give you the tools to make the right decision for you.