Ski Country Getaway: Part 2
Have you been thinking about buying a vacation home in ski country for you and your family to enjoy? There are quite a few things to consider in order to make the vacation home buying experience a happy one. In my previous article, Part 1 of this twopart series, I discussed goals for your ski home, rental income, and professional property management. In this article, I will outline further considerations that will help guide you toward your purchase.
Vacation homeowners will often buy a property for the possibility to use as “currency” to trade for other places to vacation. This helps keep lodging costs down at the places you might like to vacation in. Swap homes with your friends and networks -- or check out various websites that enable you to trade homes in destinations across the world.
Most any 1- to 4-unit mortgage lender can help you finance a vacation home. They will typically qualify you under normal underwriting guidelines. However, it is usually a good idea to use a lender that is familiar with vacation properties.
I get asked this question a lot. Yes, you can buy a vacation home with funds from your IRA. You just can’t use it personally. You also need to set up a selfdirected IRA account. So why would you want to do that?
Let’s say you live in Boulder and eventually want to retire in Summit County. You can buy a condo in Summit County with your IRA and rent it out full time as an investment for your IRA. Then when it comes time to move in, you need to disburse it from your IRA, pay any applicable taxes, and you can use it personally. There are a lot more details you need to consider here. In future articles, I will cover investing in real estate using your IRA.
The idea of having a ski home can be very exciting, nevertheless, some planning needs to be done with regard to selling the property when your family is done with it
-- or figuring out how to keep the property in the family. If a couple, for example, owns a vacation home and they have 4 kids, when the couple passes away, suddenly the property has 4 owners. Those kids will have their own children and in just 3 generations there could be 10 to 20 owners. With 10 to 20 owners, you can imagine there can be many different opinions as to what to do with the property. Some of the new owners may view the ownership more as a burden than a benefit. Taking some time to create a succession plan is worth the time and effort. Generally, it is a good idea to find an attorney with experience in creating succession plans for vacation homes. They will listen to the family’s needs and goals and create a plan that works.
There are many details to evaluate when buying a ski country getaway or vacation property. As you examine the idea of purchasing a vacation home, I recommend you pull together a team that includes a mortgage loan officer, tax accountant, financial planner, property manager, insurance agent, Realtor – and possibly an estate planning lawyer – to consult with.