LA Luxuries offers the most comprehensive inventory of vacation homes in Los Angeles. We specialize in upscale luxury properties in Beverly Hills, Hollywood Hills, and West Hollywood and can help you find the ideal location to invest in a second home.
With access to a vast range of luxury properties, we make buying a vacation home fun, finding you a location that offers everything you want and need. But, before we get started, there are a few things to consider before deciding if buying a vacation home in Los Angeles is suitable for you.
1. Assess the pros and cons of buying a vacation home in Los Angeles
Purchasing a luxury vacation home in Los Angeles can be a dream come true. But, before you make the decision to jump into the competitive California real estate market, it is a good idea to consider the pros and cons:
Pros
1. You can rent the property when you aren't using it to create a passive income stream.
2. Buying a vacation home is a good investment that can appreciate over time.
3. Owning a second home offers considerable tax benefits.
4. A second home provides a permanent location to vacation, offering significant savings on hotel and short-term rental costs.
5. There is no better place to enjoy luxury living than Los Angeles. You could eventually sell your primary residence to live in the vacation home full-time.
2. Buying a vacation home is a good investment that can appreciate over time.
3. Owning a second home offers considerable tax benefits.
4. A second home provides a permanent location to vacation, offering significant savings on hotel and short-term rental costs.
5. There is no better place to enjoy luxury living than Los Angeles. You could eventually sell your primary residence to live in the vacation home full-time.
Cons
1. You will have the added expense of owning two homes and need to be able to cover the mortgage, property taxes, insurance, and utilities for both properties.
2. Depending on your lender, you may have to make a larger down payment, since vacation homes increase your financial burden.
3. A vacation home must be maintained, even when you aren't there: Expect to pay for unexpected repairs and routine maintenance issues that arise.
4. If the vacation home is a rental property, it must be cleaned and maintained between bookings.
2. Depending on your lender, you may have to make a larger down payment, since vacation homes increase your financial burden.
3. A vacation home must be maintained, even when you aren't there: Expect to pay for unexpected repairs and routine maintenance issues that arise.
4. If the vacation home is a rental property, it must be cleaned and maintained between bookings.
2. Consider the time constraints
Many people purchase a vacation home with the intention of escaping their busy lives. However, the stark reality is most people do not have enough time to enjoy the benefits of a second home. It can be a fabulous investment if you can carve out enough time to take advantage of owning a vacation home in Los Angeles. But, if the home sits idle for an extended period, it may become more of a burden than an asset.
If you plan to use the vacation home as a rental property, determine if you have the time to maintain it. While you can hire a management company to handle the day-to-day operations, you will still need to oversee the ownership responsibilities of your second home.
3. Crunch the numbers
Never commit to buying a vacation home until you have taken a hard look at your financial picture. Talk with your financial advisor to determine if this would be a wise investment or too much for you to take on. Here are a few things to consider:
1. Do you have liquid assets to purchase the luxury property in cash, or will you need a mortgage?
2. Will you have to withdraw from a 401(K) or IRA account to cover the cost of the vacation home? If so, what are the penalties and tax ramifications?
3. Are you purchasing the property to earn rental income? If so, what are the annual projections?
4. What will it cost to maintain the property, including homeowner association fees, insurance, and property management expenses?
5. Will owning a second home be a tax benefit or disadvantage?
Financial experts recommended having the following assets in place before buying a vacation home:
- A primary residence with no mortgage.
- A retirement account that accounts for 15% of your current income.
- An emergency savings account that can cover at least six months of expenses.
- A college savings account for your child(ren).
4. How much house can you afford?
Once you have determined whether buying a vacation home is right for you, you will need to assess your financial situation to determine a housing budget that meets your needs. Speak to your financial advisor to determine how much you can afford to pay for a second home, taking into account the extraneous costs of property taxes and ownership costs.
If you do not plan on paying cash for the property, speak to your lender about getting a pre-approval letter to help make the buying process smoother. Sellers of luxury properties prefer working with verified buyers, and having your documentation in order will help you secure a favorable deal when buying a vacation home.
5. Is now a good time to buy a vacation home?
According to the National Association of Realtors®, in the first quarter of 2023, mortgage rates were almost double those of a year ago. The median home value in Los Angeles County is $890,716, and the market for luxury properties is extremely competitive. Due to rising interest rates, the monthly mortgage payment on a 30-year fixed-rate mortgage has climbed to $4,286 per month, considerably higher than last year.
With rising rates comes lower housing prices, and as sellers begin to lower their asking price, you may be able to cash in on a lucrative deal when buying a vacation home in Los Angeles.
Contact Jordan Pollack for personalized service in finding the vacation home of your dreams
Jordan Pollack has extensive knowledge of the Los Angeles real estate market and can help you find luxury properties that meet the demands of your lifestyle. Whether you want a gated mansion with an unparalleled view of the city or a small bungalow in the hills, LA Luxuries can help you find it.
Contact Jordan Pollack today to learn more about buying a vacation home in Los Angeles, and together we can find you the perfect place to enjoy with your family and friends.
