By Benny Bercovicz
Most of us would enjoy having a vacation home away from home. For some people it is not a dream but a real possibility that they consider. Should we buy or rent? If you consider the State of Florida for your destination, there are some facts that you should consider before making the final decision.
How Long Do You Plan to Stay
If it is for a short term 2 – 6 months it may be beneficial to rent, but if you plan on staying 2-6 months every year in the same area it may be beneficial to buy, because you spread the initial down payment investment over a longer period.
Is the real estate market in the area appreciating or depreciating
If the real estate market in the area is appreciating then in addition to the other benefits of buying there will be appreciation in value, and in some cases the rate of appreciation may be greater than the bank saving accounts. In case of the real estate market is depreciating it is more beneficial to rent.
Initial down payment of minimum 30% for second home purchase
The initial down payment on second home purchase is minimum 30% and you have to determine if you want to tie up the cash, and or you are in the position to invest the 30% of the purchase price.
Real Estate Taxes, Maintenance, sales commission
In case of purchasing, in addition to the down payments there will be a long term commitment for taxes which will increase according the appreciation rate of the property, closing costs, maintenance and Real Estate commission and closing costs on selling.
Flexibility to choose multiple different locations
Renting has the advantage of low investment with the flexibility to choose different locations. With one single rent payment everything is taken care of by others in most cases and you can just concentrate on enjoying your vacation. The disadvantage of renting in hi demand area is that you have to plan way in advance to get the property you want.
The financial impact of buying vs. renting depends on your circumstances, and to better understand how the process will impact your situation I recommend the http://www.realtor.com/mortgage/tools/rent-or-buy-calculator/ realtor.com® rent vs. buy calculator can help you calculate the net cost of buying a home versus the cost of renting over time.
Bank rate is another calculator to plug in your numbers and get the comparison http://www.bankrate.com/calculators/mortgages/rent-or-buy-home.aspx?ec_id=m1102445&s_kwcid=AL!1325!3!41196397208!b!!s!!buy%20vs%20rent&ef_id=VDXPxwAABIf@peca:20150120024143:s
In any event the decision to buy or rent is different for each case and should be carefully analyzed based on personal circumstances and preferences.
I welcome feedback and suggestions on the subject