Tired of spending your summers commuting back and forth between your full-time residence and your beach rental? Maybe the thought of investing in a second home has crossed your mind. Aside from giving you a vacation destination without the hassle of renting, buying a home at the beach can also deliver a valuable long-term return on investment (ROI) if you ever decide to sell, and in the short-term, it can offer an income stream as a rental property.

So what should you consider before taking the plunge? Check out our tips below to see if you’re financially prepared to buy the beach house of your dreams.

Stronger Qualifications

Before you get in too deep with the house search, make sure you’re confident in your current financial situation. Banks understand that people will always pay their primary mortgage before anything else, which typically results in more requirements for financing a second home. This means banks will want to see higher credit scores and larger down payments, as well as additional assets & reserve requirements. The good news is that you can still find programs that allow you to purchase a vacation home with as little as a 10 percent down payment. Remember, always do your research and consult multiple banks for your best financing options.

Balancing Vacation Property & Income Property

With interest rates still near all-time low levels, it’s important to understand that rates for investment and vacation properties are typically slightly higher than owner-occupied properties. One way to offset the impact on your monthly payment is to consider putting more money down. If that is not an option, you could also decide to rent your property during peak vacation season to generate additional cash flow. Balancing family vacation time with weekly rentals may be a key ingredient to make owning a shore property successful. Keep in mind that listing your property with a realtor may incur additional costs or commissions, so plan accordingly.

Location and Cost

As you know, location has an immense impact on the final price and ultimately your financial obligation when purchasing a home. The closer the property is to the beach, typically the more it will cost. And although you may be able to secure higher rental rates, the final cost to you, the owner, may not always be the best investment. Looking at houses a couple blocks from the beach, older properties, or homes in need of some cosmetic updates can make getting into the property more affordable. While you may not command top rental rates, it may make your property a more attractive option for the average family to rent for their vacation week.

Odds and Ends

Keep in mind that it’s not just the cost of the home that you need to consider. You’ll also have utilities and other bills that will add up – cable/internet, electric, condo fees, flood insurance, recycling. The bigger the property, the more those expenses add up. Remember, these are costs that you not only have during the months you will use the property the most, they are typically year-round obligations. Be sure you take into account all additional/unforeseen expenses when making a plan and selecting a property. 


While we have mentioned many financial commitments in buying a beach home, there are also financial gains that can be made with the purchase. If you decide down the road to cash-in and find a new place to vacation, you may see long-term capital gain. It’s also important to understand that traditionally properties in popular vacation areas tend to see higher-than-average appreciation. In the same light, if you find yourself using your beach home less, but you don’t want to sell, there is always the option of renting your property. With vacation home rentals on the rise, you can put some cash back in your pocket or use it to offset your loans.

Lastly, there are emotional benefits to owning your own vacation home that can provide you and your family memories that last a lifetime.

Planning ahead and examining the upfront costs and long-term benefits are key as you consider your options for purchasing a second home. Come see our specialists at Kelly Team at Envoy Mortgage to talk about your options. Let us help you get that much closer to dipping your toes in the water of your own beach home!

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