How to Purchase a Vacation Home With Friends or Family

You want a cottage by the sea, a chalet by a ski run or a lodge in the woods. But vacation homes are quite expensive, and most of us don’t have the time to care for a second home in addition to our primary residence? So, here is an idea: Split the financial obligations with a family member or friend! This article covers most of the important steps to learning how to purchase a vacation home.

Partnering up sounds great on paper, but purchasing a vacation home with family and friends can be risky. After all, if things do not go well, it can spell the end of your friendship. Not to mention you may end up in a legal battle over the home. After all, you might already be commonly renting a vacation place with said friends or family. Or you could take turns using the house, so you don’t actually overlap.

Still, this approach can also turn into an express lane to disaster if you don’t navigate the relationship with care and really learn how to purchase a vacation home.

Do not panic! Before you sign on the dotted line, here are some important questions to protect your finances and also leave your ties of friendship or family intact.

TIC or LLC?

Ownership of property by 2 or more parties who are not married – friends, relatives (it makes no difference) can be setup as a limited liability corporation (LLC) or as a tenancy in common (TIC). And while setting up an LLC will entail hundred dollars in additional fees and a tad more paperwork. A limited liability corporation can make it easier to give away or sell an interest in the vacation home and you are treated like an individual for tax purposes, but with the extra protection of a corporate liability shield. An operating agreement will be drafted to establish the obligations and rights of the members in the LLC.

Why this is important when learning how to purchase a vacation home: Under a tenancy in common, somebody who’s injured while in your shared vacation home can sue you and the other co-owners for all you are worth. Additionally, due to the fact that you own a house with somebody else, you’ve less control over who can be allowed to enter the house. So if your nephew wants to celebrate his high school graduation with a blowout party on your vacation home, and somebody steps on a broken glass, it can come back to bite you. This is much less of a risk if you choose an LLC.

Who is responsible for what?

Another reason why you should set up a limited liability corporation instead of a tenancy in common: Limited liability corporations are normally required by law to have an operating agreement. You should have an attorney draft an agreement which clearly explains everybody’s ownership interest.

That ratio, be it 80:20 or 50:50, will determine how costs like real estate taxes and insurance are divided. The agreement should also clearly explain who the manager of the vacation home is, capital improvements and how the maintenance of the home is going to be paid for and performed. The agreement gives the owners a guideline so that everyone knows before they own the place, what the parameters are.

You can think of it as real-estate prenuptial agreement, it’s there to ensure that things run smoothly and head off resentment at the pass. Otherwise any under discussed issues- like who is supposed to close up for the season or even clean out the gutters – can quickly and easily turn emotional.

Who gets which holidays and weekends?

People purchasing a house together should ask themselves if the other owners plan on being at the house at the same time, or alternate in using it, since vacation homes normally have a prime-time of just a few months.

Normally, everyone wants to go to the vacation home at the same time of the year, during school breaks for example. If the owners do not talk about this in advance it can lead to everybody showing up at the home on the same day- which isn’t exactly the tranquil vacation home you have always dreamed about.

If you decide to split, you should work out an annual schedule in advance and also consider rotating who gets the major holiday weekends. You should also agree that swaps and changes can be made but only with the permission of all the parties involved.

To rent or not to rent? / How to purchase a vacation home

From time to time your vacation home is going to be unoccupied no matter how many co-owners you have. If you are a neat freak and do not like strangers sleeping in your bed, you’ll not want to rent your vacation home. However, your brother might want to make some cash by renting out your shared vacation home.

You should hammer out whether you are going to rent out the vacation home so that you can generate income when you are not there. If all the parties agree to rent the vacation home just ensure where you are purchasing will allow that. Some communities do not allow short-term rentals.

What happens if somebody wants out? / How to purchase a vacation home

You should have at least one discussion about how long everybody wants to be on-board and what happens if one of the co-owners wants to sell. Giving the other owners right of first refusal if you want to sell your share is a way to reduce conflict. You should think about if you can afford to buy out a co-owner or if you’ll be able to cover the extra maintenance costs and mortgage in the event somebody wants out.

Erika Bentley

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How to Promote Your Vacation Home Rental

In the past, promotion of the availability of a vacation home rental was limited to a few local avenues – print advertising, flyers handed out or hung up around town, postcards left in local establishments, and word of mouth. With the advent of the Internet, a new option has been created for marketing vacation rentals. You can now promote your rental home across the globe relatively inexpensively and easily. You can create your own website or you can take advantage of listing sites that draw the traffic in for you.

In this first part of a forthcoming series of articles, you will learn the basics of how to promote a vacation rental home. Each additional installment in this series will go into more detail about marketing vacation rentals in a variety of ways.

Marketing Vacation Rentals with Individual Websites

It has become very easy for anyone to buy a domain and hosting package and promote a vacation home rental online. Plus, you don’t have to know HTML or be an experienced web designer to take advantage of marketing vacation rentals in this way; there are many programs that have been created that make the creation of a slick-looking website easy. You want to make sure that your vacation home rental site looks as professional as possible and contains pictures of the inside and out as well as details about all of the amenities available. You can also include information about price and availability if you wish, or you can require that interested parties contact you for more information. And make sure that you have a way for visitors to contact you!

At its core, your vacation home rental site should serve as an online version of a glossy brochure that you might hand out to prospective renters. You will learn more about ways to create great sites for marketing vacation rentals and how to get them noticed in future articles in this series.

Vacation Home Rental Sites

Whether you want to create your own website for your vacation home rental property or just want an easy way to advertise your home, you may be interested in looking into the benefits of vacation rental websites. These sites make marketing vacation rentals easy by compiling listings of homes for rent by owners and/or companies to help bring the renters to your door. Many vacation home rental sites charge a small fee for your listing but allow you to incorporate photographs, text, and a link to your own site. These sites may also make it easy for renters to get in touch with the owners of homes. Future articles will teach you what to look for in a vacation home rental site and how to promote a vacation rental alongside the many listings that are available.

Marketing Vacation Rentals with Print Advertising – From Flyers to Newspaper Ads

While the Internet is an extremely important tool in marketing vacation rentals, traditional marketing venues still can make a difference if you are looking to attract renters. You can create flyers with pictures of your house, prices, and a list of amenities that you can post in the town where your vacation home rental is located. This is an extremely inexpensive way to get noticed, but it is important to design your flyers with eye-catching images and easy-to-read text. You can also create postcards with this information that can be mailed to local households or placed in local stores for visitors and residents to pick up.

Another option for marketing vacation rentals is to run advertisements in the classified section of any local newspaper. The downside to this is that you may wind up paying a lot for an ad that will only be seen by a limited number of people, but that same ad will be specifically targeted in the area for your vacation home rental and may get strong results.

Preparing Your Vacation Home Rental Property

No matter how you choose to go about marketing vacation rentals, you will need to have photographs of your home taken to put on the web, in the newspaper, or in a flyer. Make sure that you prepare your home so that it looks its best – that the lawn is trimmed, that the pool area is tidy, that the windows are clean, and so on. Then, take a series of pictures from several angles of the home so that a prospective renter knows exactly what he or she will find. If you can, add something to your home that will make it stand out. For example, use brightly colored curtains, or take your photograph at night. Above all, make sure to give people a reason to look more closely at what you have to offer in a vacation home rental.

Word of Mouth

The simplest and cheapest way for marketing vacation rentals is by word of mouth. Tell anyone and everyone that you have a home available. Tell your friends, tell your neighbors, tell the people at the bank and at the grocery store. While the person you tell may not be the next person to rent your home, he or she may have a friend or relative who is in the market for a vacation home rental.

Conclusion

Above is just a small sampling of options that you have for marketing vacation rentals so that they are booked around the year. Future articles will give you more in-depth information about these options as well as additional tips and ideas about how to promote a vacation rental successfully.

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