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What You Need to Know Before You Buy a Vacation Home with Friends

27 July 2023
What You Need to Know Before You Buy a Vacation Home with Friends

As more and more millennials and even Gen Zs grow to be more financially literate, investing in money-generating assets is increasingly becoming a popular venture among this age bracket. In fact, a group of friends with an interest in the real estate market even think of buying a vacation home together, both for private use and a rental property to generate passive income.

 

While teaming up for a property purchase may sound like a cost-efficient way to secure an investment, it can prove to be complicated and problematic if one within the buying group backs out. And so, before deciding to buy a vacation home with your buddies, it's critical to factor in several things first to ensure that your property investment wouldn't be for nothing, and that this financial venture wouldn't be the cause of turning your friends into foes.

 

In this blog post, allow Lumina Homes to give you a comprehensive guide as to what you need to know before buying that coveted vacation home with your constant companions.

 

 

Factors to Consider Before Buying a Home for Vacation with Friends

Before picking your vacation home with your dearest friends, you should delve deeper into the following considerations in order to assure that you're fully aware of and geared up for the risks that come with a engaging in a group investment in the housing market. These factors are as follows.

 

 

Purpose of the vacation home

First and foremost, it must be crystal-clear to the group as to what the vacation home property's purpose is. Would the beachfront property be intended entirely for vacation use with friends? Is it meant to be a rental property whose passive income will be split accordingly among investors? Or is it a mix of both personal use and a rental investment property? Becoming clear about this is an essential step to proceed on the more complicated matters.

 

 

Creditworthiness of each friend

If you're buying a vacation home with a mortgage loan, each friend's individual creditworthiness must be taken into account, including yours. Openly discuss each other's monthly income, existing debt responsibilities, other financial obligations, and the like. This ensures that everyone involved in the investment is capable of paying every time the mortgage deadline draws near.

 

 

The vacation home's specifications

It's pointless looking for potential properties without first discussing what each of you desires for in a vacation home, including interior design, exact location, and amenities. Inevitably, not everyone will have the same preferences, and this is where a compromise must be reached to settle differences.

 

 

When someone backs out

One of the most important discussions that your group needs to address is when someone backs out of the property investment. As such, you must ensure to pen a comprehensive written agreement that will unambiguously detail the legal consequences of backing out, and how you can best deal with it with the rest of the group who stayed.

 

 

Division of individual responsibilities

This is where conflicts with an s may arise, where disagreements over individual responsibilities cause some bad blood within the group. With this being said, amicably talk about who will be in charge of making mortgage payments, manage repairs, and even basic tasks such as household chores.

 

 

What to Look for in a Vacation Home with Friends

After all has been discussed accordingly and a compromise has been reached, you might want to put more serious thought over what to look for in a vacation home that both your friends and future tenants would love to have. Let's talk about these essentials below.

 

 

Location, location, location

It's a hackneyed expression in the real estate industry but only because of how resoundingly true that location, location, and location are the most important aspect of property investments. Ideally, your vacation home's location must be at a place you'd want to go to as well if you put your feet in the shoes of tenants on vacation. Having said this, an excellent vacation home site is accessible, conveniently located, and near essential establishments.

 

 

Quality amenities

In addition to location, the available amenities, and whether they are of incontestable quality, are also crucial when buying a vacation home either with friends or on your own. Is there a swimming pool, a hot tub, or an outdoor recreational area? These property amenities can attract more serious tenants who want to spend a week or two off from their stressful jobs.

 

 

Affordability

Another equally important consideration is the property's affordability for you, your friends, and your future tenants should you decide to convert it into a rental property. After all, buying a property can be expensive, especially if it's nestled in a location that's a hotspot for local and international tourists. It will also incur further costs if there are added amenities such as a swimming pool. You must thoroughly discuss these with your friends, come up with a reasonable budget and, if deemed necessary, consult a mortgage broker or a real estate agent to talk about everything related to payments and the property purchase price itself, from the down payment, closing costs, property taxes, homeowners insurance, private mortgage insurance, and more.

 

 

Safety and security

Many tourists also factor in the crime rate of a particular destination before fully deciding to book a property reservation. As such, also make your research about the property site's crime rates, as well as assess security protocols that are in place to give tenants peace of mind during the entirety of their stay.

 

At Lumina Homes, there surely is a vacation property that you could invest in with your friends. All of our housing projects nationwide are strategically located near the best local tourist spots that visitors and vacationers go to for fun and relaxation. Aside from leisure destinations, our housing communities are also conveniently near schools, hospitals, supermarkets, and major roads.

 

Moreover, our affordable house and lot provisions are well equipped with communal amenities such as a modern community center, multipurpose hall, gazebos, basketball court, jogging path, mini-gardens, and a play area for the entire community of homeowners.

 

Meanwhile, if an affordable house and lot for sale is what you're looking to secure for your own family, we can help you with that as well! For more than a decade now, Lumina Homes has served thousands of Filipino families attain homeownership in conveniently located neighborhoods in a much less hassle home-buying process. Join our ever-growing community of Lumina homeowners by making your home reservation online. Send us your property investment inquiries today!

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