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Investing in a Vacation Property


With interest rates still very low, now may be a good time to think about investing in a vacation home to use as a rental property.

As with any home purchase, your first step should be to review your financial situation and plan out a solid budget. A second mortgage—not to mention upkeep on a vacation rental—is not something everyone can manage financially, so don’t push yourself over your limit. When you do your budget, use the following as a good starting point:

1 week’s rent = 1 mortgage payment

Rented 4 months = break even

Of course, your break-even point may vary once you crunch the numbers.

Next, decide on the type of home you want to buy and which vacation area you want to buy in.

A vacation home’s location and size can make or break your investment. As a general rule, renters look for smaller houses—ones with two to three bedrooms—as opposed to multi-room mansions. As for location, even though you may have your heart set on a certain resort or vacation area, prices can be quite high. If you can, try to find a less expensive area that still has decent rental rates.

Finally, you’ll need to hire a good property management company. A management company is essential for several reasons. Most vacation property management companies will help you rent out the property and will also oversee the day-to-day business of your rental (and handle any problems, should they arise). Also, a good management company will have connections to local goods and services (such as contractors and repairmen).

Much like buying a house in order to sell it for a profit, treat your vacation rental as a business. If you do, then the time that you spend in your vacation home will be that much more enjoyable.

For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988. Licensed by the Commissioner of Banks - License No. MB2671

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