Owning a Vacation Cabin

If you’ve ever thought about buying a cabin near your favorite mountain vacation destination, you’re not alone. Many people buy second properties, from baby boomer homeowners who’ve paid off their principal home, to those millennials who have started buying their vacation home first, while still paying rent in the high-priced city where they’re still building their careers.

Buying a vacation property can make sense for both financial and the obvious lifestyle reasons. Here are some of the things to consider.

The Pros

If you use the cabin just for your own family use, you can come and go as you please, with no booking hassles. You can enjoy an impromptu weekend or a week’s vacation at a moment’s notice. You’ll also be able to invite friends and family up or lend them the place, as you choose.

You could generate rental income. Depending on where you buy, the new cabin could generate some serious cash. Just as many savvy investors purchase properties primarily for their rental incomes, you can too. Services like Airbnb or VRBO make renting your place simple for short term rentals. And for longer term rentals, or if you’re too far away from the property to go there yourself, most markets have property management companies that offer everything from the crucially important tenant screening to providing reliable housekeeping and maintenance services.

Most property can appreciate if well maintained. If you do the proper research and get the best price on your purchase, it will probably gain value over the long term. Even without the gradual appreciation the real estate in the USA has typically shown, if you’re paying a mortgage (and having tenants pay that for you) you’re also building equity each month.

The Cons

Expenses typically include the mortgage, taxes, utilities, insurance, and in some cases, homeowner fees. Smart buyers also allow room in the budget for upgrades as well as unplanned maintenance. If you have problem guests, or unexpected vacancies that you can’t fill, your asset could turn into a burden.

Owning a vacation cabin in even the most popular area carries some risk. You could lose money on your purchase if, for some reason, you had to sell during a market downturn. A long stretch of adverse weather could keep renters away. Renting property also comes with a certain amount of liability.

For the average buyer, owning a second home or cabin eats up most of their vacation budget. The annual trip to warmer climes each winter might get sacrificed to the cost of the new getaway. You may squeeze in a new destination here and there, but, for the most part, downtime will be spent at the cabin. Ask yourself if it will be worth it.

Important Questions

How Often Will I Use the Cabin? If you plan to use the home-away-from-home every weekend or once or twice a month, try to stay within a two-hour drive. You won’t want the trip to the cabin to become an obstacle that keeps you from enjoying it.

What Time of Year Will I Use the Cabin? If it’s a summer getaway you seek, then consider something near a lake. A lakefront property opens up all sorts of summer fun like kayaking, swimming, fishing, and boating, among other things. A lakeside cabin will also fetch considerably more rental income year-round. If you and the family lean more towards winter activities, buy close to the slopes. Like properties near a lake, cabins convenient to ski areas also rent faster and offer more income than those further away from the action.

How Much Rental Income Will I Need From the Cabin? Look at similar properties on vacation rental sites to get an idea of how much money your place might rent for throughout the year. Assume that the cabin will sit empty for at least half of the time you would like it occupied. Then calculate its total annual expenses against its potential yearly income. Will you be willing and able to make up any shortfalls from your household budget?

Where to Buy

If you already have a spot that you’ll never get tired of coming to, you’re ahead of the game. Believe it or not, according to CNBC, sixty-five percent of people looking for a vacation home do not have a specific destination in mind. If you fall into the latter category, consider the following markets that boast gorgeous scenery, a wide range of year-round activities, and lots of reasonably priced properties.

Great Smoky Mountains National Park, Tennessee

This national park is open year-round, has no admission fee, and draws more than ten million visitors each year. It’s the most popular national park in the country, and the area around the gateway towns of Gatlinburg and Pigeon Forge hosts hundreds of luxury vacation cabins nestled in the foothills. With countless family-friendly attraction in the towns, and stunning natural mountain scenery all around, the area is perfect for a cabin vacation. Some owners self-manage, while most owners of Gatlinburg cabins use local management agencies to handle the rental and servicing process. Check around the agencies to find the one that offers the best return for owners.

Big Sky, Montana

One of several gateways to Yellowstone National Park, Big Sky offers everything from skiing and dog sledding in winter to golf and fly fishing in the summer. Located only 55 miles south of a major airport in Bozeman, Big Sky’s convenience adds to its popularity with cabin buyers.

Killington, Vermont

Located 270 miles north of New York City and 159 miles northwest of Boston, Killington, Vermont offers cabin buyers a chance for steady rental income. Along with some of the nation’s best skiing, snowboarding, and tubing during winter months, a wide variety of activities and events like mountain biking, hiking, and weekly concerts draw visitors to Killington year-round.

Big Bear, California

Buy a cabin in Big Bear, California, and you can hit the slopes in the morning and catch a concert at the Hollywood Bowl in the evening. Situated just 100 miles east of Los Angeles, the mountain resort town of Big Bear features plenty of alpine activities, excellent shopping and dining, and lots of properties along its gorgeous lake.

Finger Lakes, New York

New York’s Finger Lake Region consists of eleven long and narrow lakes that run north to south. Area vacation rentals range from rustic cabins to luxury homes. With a median listing price of less than $200,000 and a median annual rental income of more than $20,000, vacation properties in the area typically generate more than enough cash to cover expenses. Along with fishing, boating, and swimming, other popular activities include the Seneca Lake Wine Trail and Watkins Glen State Park.

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