When buying a Vacation Home, it is important to look at it as a business, just like any other. It should be managed and analyzed as a business.
Before you buy, you should define whether you will use it for your vacation, as a second home, or just as an investment. This makes a difference when it comes time to apply to the bank for financing.
If it will be a second home, the bank understands that profit generation will not be the main objective and the whole financing process, including interest rates, will follow the same model as for your main property.
But if the property is used primarily as a source of income, the bank will investigate the rental history, values, and earning potential of the property. This will define its ability to assume the costs of financing and consequently the interest rates.
Don't forget. Location, location, location!
Furthermore, the buying process follows almost the same path as for a traditional property. Choose a good realtor, think about locations that are more attractive to tourists, analyze values and potential returns, and make a conscious investment.
Last but not least, before buying your property you need to check the rules of the condominium / neighborhood association and also of the city. In several places it is not allowed to do short-term rentals and this would make the whole purpose of the investment unfeasible. Be aware and ask your realtor to help you with this issue.
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