Why So Many Millennials Are Buying Vacation Homes While Still Renting
Millennials are doing this their things their way. This comes to purchase a home. Millennials are holding off on becoming homeowners and are opting to rent instead of making a purchase. What makes this interesting is that they are purchasing vacation homes. They are getting these homes where they will only live at a week or two a year while on vacation. This may sound odd but it is a smart thing to do on their part.
Home Buying Plan
Purchasing a home is a major decision and takes a lot of planning. A person will need to think of their current goals such as a shorter commute to work. They will also need to think about long term goals including having affording a wedding, kids, and thinking about retirement. A lot of commitment goes into purchasing a home. A person will need to think about every area of their finances. For Millennial’s, this is very permanent and they are not looking forward to such a commitment.
They are waiting longer to get married and have children. They are also changing jobs more frequently and are not afraid to relocate. A vacation home will allow them to getaway. They can live in an urban area and then escape to their vacation home. This gives them a reason to get away and will allow them to get more home for their money. They can have a spacious place to retreat.
A vacation home is a great investment. A person is more likely to purchase a vacation home in an area that is less expensive than where they are currently living. They will be able to get more home for the price. A vacation home is also a good investment. If a person ever is in a pinch or wants to build their dream home they have the potential to sell their home. Most people are purchasing a vacation home to hold on to and as a long term investment. The retirement home can be a forever home when retirement comes around. By then the home will be paid off and a person will get to relax in a nice climate. The vacation homes will allow a person to get away from busy city life and relax in a peaceful setting.
Cities are Expensive
Millennials are working in cities and purchasing a home in a city is very expensive. With student loan debt and other finances, they cannot afford it. The average home in Manhattan is valued at over a million dollars. Even with a good job, this is expensive with little to no properly. Paying rent makes it almost impossible to save for a home that is so expensive. Purchasing a home somewhere that is more affordable outside of a city can be a big help.
In most vacation destinations while a person does enjoy going there to relax they may not want to live or settle down in that area. Purchasing a vacation home will allow a person to have the best of both worlds. They will be able to enjoy being a homeowner in a vacation that they like. They will also continue to live in a city where they can work without having to pay an insane amount for a home.
Owning a home can be a good investment. If a person owns a vacation home in an area that is popular they can see a return on their investment. For example, if a person purchases their vacation home for $300,000 they can make a good gain within a couple of years. Property values go up about three percent each year. This is a profit of over $18,000 a year. This will depend on the amount of money that was used as a down payment but within a couple of years if the home is sold they can make a nice profit.
A person will need to learn the market and the way home prices are affected but owning a vacation home can be profitable. A person will only be in the home a few weeks a year so it will not see the normal wear and tear from everyday living. There are other options a person can have when they are not living in the home. The home is going to be vacant most of the year. A person can rent the home out by the week or nightly to other vacationers. They can work with an online agency to help with this. While they will need to pay the agency a person can make money off their vacation home when it is not in use. This will allow them to put money towards the mortgage and depending on how popular the other home, this can help them pay the rent on the building they are living in.
Reduce Tax Liability
When a person owns a home they can get several discounts on their taxes. They can get homeownership discounts and may be able to get discounts on taxes and some other areas such as mortgage costs. A person that owns a vacation home may be able to pay lower taxes than in the high tax state where they are working. This will help them save a lot of money and will allow them to take a decent amount off of their taxes. A person will need to show how much time they spent at their vacation home but working with the right accountant can lead to some good deductions when it comes to tax filing.
With the increasing prices of homes especially in a populated area, it is no wonder why millennials are purchasing vacation homes while they are still renting their main residents. The location of the vacation homes are much more affordable and will give a person a good excuse to take a vacation. These homes can be a good investment and Millennial’s can become homeowners while still living close to their jobs.