Top 7 Signs You Are Ready to Buy a Vacation Home


Do you start a “calendar count down” as soon as you book a vacation rental home – effectively counting the day until your departure?  Do you catch yourself day dreaming at work about wide sandy beaches and a cold cocktail in hand?  Do you crave the adventure of trying new activities and gaining new experiences?

Perhaps, you like thousands of other families, have rented a vacation home in the Outer Banks for years.  I’m sure it has probably crossed your mind what it would take to own your very own vacation home instead of paying someone else rent.  You cherish that time where the whole extended family can get together and create lasting memories.  You may be in that stage of life where you have significant disposable income and future prospects appear good for the next few years.  Is your primary residence almost paid off?  Perhaps, you are looking for additional tax advantages.

There are great opportunities today in the Outer Banks real estate market.  Some vacation rental properties earn positive cash flow!  That’s like having your cake and eating it to.  Consider yourself being in the right place at the right time.  You just have to open your eyes to see the possibilities.  Looking back on today’s market with low interest rates, low prices and more inventory – there may never be a better time to buy!

Buying a vacation rental home, second home or investment property is an excellent way to expand and diversify your real estate portfolio.  There are some questions you need to ask yourself first before writing out that purchase offer.

Visit during Other Seasons

While the Outer Banks is well known for its beaches and summertime flocks of families; consider that you will likely visit during other times of the year.  While the summer allows you full occupancy and greater rents, you will be able to enjoy the slower pace for the other seasons.  While spring and fall are the best times to visit, you may be preparing the property for visitors or closing it for the winter.  While our winters tend to be mild, many folks used to the bustle of summer find the winter too isolating.  Before you jump in, consider visiting the area during different times of year to see if it still appeals to you.

Age and Timing

The typical buyer for a second home is in their 50’s.  This makes a lot of sense from several angles.  This typically is the age where disposable income is the highest.  Any children are older and have likely completed college.  If grandchildren are in the picture, then having a place to create special memories becomes compelling.  All these things also allow for more free time to devote to a vacation home than you had in prior decades. It is also prior to retirement age, where the property will appreciate and can be later sold to supplement retirement income. 


Ideally, your vacation home should be within a 4 hour drive from your primary home.  This makes it more likely for you to be able to visit.  While property managers or a handyman can be used for repairs or emergencies; most second home buyers like the spontaneity of taking off for the second home without too much preparation required. 

Your second home can also be used in the future as a retirement home.  Locations close to family ensures that you will still have family visit you during your retirement years.

Understand the Full Financial Commitment

The cost of the vacation home is not only the purchase price.  You must also budget for insurance and taxes.  Depending on the location, additional insurance, like flood insurance may be required.  How much you use the vacation home will also impact your personal tax situation.

If you are buying in a resort area with common amenities or purchasing a condo or townhouse, then you must also budget for Home Owner Association (HOA) dues into your expenses.  Ask about any future assessments that may be coming due so you are not surprised with a large increase.  Find out how well the HOA is managed.

Of course, you will also have utility expenses for electric, water and the like.  Get an estimate based on the previous owners experience as rates from other jurisdictions can vary widely.  If the home has a pool or hot tub, then you will also have to budget for the weekly treatment and cleaning expenses.

How will you manage the investment?  Will you hire a professional property management company or take on some of the responsibility yourself with VRBO (Vacation Rental by Owner)?  Do you have local assistance for guest or maintenance emergencies?  Make sure your budget includes the professional manager’s commission or budget the costs for cleaning and other services if managing through a local company or yourself.

If you are purchasing an older home, consider what improvements you would like to make and the cost.  Also, consider how much decorating costs will fit into your budget to bring the home to the style and look you desire.

The bottom line is to achieve positive cash flow where the rental amount covers the monthly expenses and leaves some cash.  In the Outer Banks, full occupancy is typical for June through August and some desirable homes continue to get rentals well before the season and after.

Is it worth the money?

Take the time to look at various communities.  Each community on the Outer Banks has a different vibe.  Make sure the community you select fits with your needs and the target market for your rental.  Get a current market evaluation to check the pricing and the comparables. 

If you plan to retire in a few years to the vacation home and make it your permanent home then consider what kind of neighborhood you want to live in then.  A resort area with lots of amenities is great for a weeks’ vacation but makes it difficult to meet and know your neighbors when you live there year round. 

How long do you plan to keep the home and what is the future appreciation potential?  Will you eventually use it as a retirement home or sell it to supplement your retirement income.  If your plans change, how hard will it be to sell and get a return on your investment?

Custom Home

If this is the “dream home” you have always wanted, consider designing and building a custom home.  Selecting the land and designing the house to get exactly what you want can lead to years of living the good life.  Problem is – you may never want to rent it out!

Do I have enough cash?

Mortgages for investors have been easier to come by lately.  Even so, one must make sure you have enough cash to cover the expenses and have a cushion for unexpected emergencies.  Upfront, you will need 20-25% of the purchase price for a down payment, you will also need to cover the closing costs.  If you will be making improvements to the property before renting, you will also need cash to complete these repairs and improvements.  It can be a large amount of money going out before you even get the first rental.  Are you prepared for this – both mentally and financially?

Buying a vacation home can be a very rewarding experience with decades of enjoyment and fond memories.  In fact, you could start a new legacy and pass the home to subsequent generations to enjoy on this beautiful barrier island.  There are lots of things to consider to make the best choice for you.  Let Eillu be your guide.  We won’t rush you.  We will share our local knowledge in the hope that we can welcome a new neighbor.


Yes, You Can Expect More With The Eillu Real Estate Team!

Mailing Address
PO Box 3009, Kitty Hawk, NC 27949
Physical Address
3712 Suite B North Croatan Hwy
Kitty Hawk, NC 27949
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