You'd like to buy a vacation home, but you're not sure where to begin. Perhaps the single most important point to determine up front is why you are buying a vacation home. Are you trying to generate income by renting the property? Would you like to have a place to take your family every year that will likely appreciate in value? Would you prefer some flexibility in location and like to vacation at a different spot each year?

Once you determine your needs in a vacation home, it is wise to understand some of the options available to you in buying a second home. Probably the most straight-forward is to consider purchasing a home outright. If you can't afford the full price of homes in the area you desire, there are still a couple of options available for you. One is to consider purchasing a home with friends or family, while another is to look into timesharing. All these options have nuances to consider in relation to your needs and means.

By purchasing the home yourself, you have the most control over the property and can capture all of the gains and benefits associated with owning real property. You may also be able to offset some of your expenses by renting out the home in peak seasons. Be sure to investigate federal income tax laws so you can make the most of any potential tax breaks. Also ask about zoning, covenants, land use in areas surrounding your property, and property management fees. In some areas these restrictions may prevent you to use your property as you wish. Additionally, be prepared to pay as much as 25% of your rental income in property management fees for weekly rentals.

If you decide to purchase a home with friends or family, make sure to put the agreement and all terms in writing. You may want to do most of this in advance as many homes go quickly and it will help target your search to the right kinds of homes. You may also want to consider homes with features that allow all the owners to be at the home at once (multiple masters, separate living spaces, etc). Again, the questions and concerns above should be considered.

If all this is too complicated, inflexible or expensive and you've come to the conclusion that timesharing is right for you, be aware that a timeshare purchase is not an investment. Most units depreciate over time and the resale market is tricky to navigate. If you are buying with a resort developer, make sure they are financially stable. Also be sure to find out what they offer for buying through them as opposed to the resale market. At times, the resale market will offer the same unit and season at a fraction of the price the developer is offering. You'd also be wise to arrange for your financing in advance, as developer financing is usually offered at above market rates.

Lastly, don't buy on a whim. You didn't buy your primary residence that way, and you shouldn't buy a second home without due diligence. Research the location. Make sure the area has the amenities and recreation you desire, allows you to use the property as you wish, and is within your budget.

Reid Colson is a Principal in Bridlewood, a custom home builder serving the Central Virginia market. Bridlewood builds custom homes and vacation getaways for discriminating buyers. They are committed to providing the highest levels of professional service and consistent communication throughout the design and building process.