Purchasing a summer home of your own on Cape Cod is a dream for many who have spent at least one summer on this majestic sandbar. To buy a Cape Cod vacation home of your own would provide you with the little escape during the hot summer months to enjoy the beaches, festivities and quaint small town charm that Cape Cod is known for. For many who frequent or would like to frequent Cape Cod during the summer months, it makes sense to invest in your own property instead of spending your money on renting someone else’s home. When you buy a Cape Cod vacation home, you would have the property to use on your own and have the ability to make some extra money by renting it out when you are not using it yourself. However, it can be pricey to buy a Cape Cod vacation home. It is also a big commitment that comes with a number of responsibilities that may be overwhelming to take on alone. For these reasons, it may be wise to invest in a Cape Cod rental property with family or friends that share your love for Cape Cod. However, owning a property with friends or family can come with its own set of challenges. So how do you make your dream of owning your own piece of Cape Cod to enjoy with family or friends? Follow these simple steps to make your dream a reality and buy a Cape Cod vacation home!
LLC or TIC?
The first question you and your family or friends need to decide on when you buy a Cape Cod vacation home is whether you want to own the property as an LLC or a TIC. An LLC is a limited liability corporation, and a TIC is a tenancy in common. They are the two ways to own property with family, friends or anyone that you are not married to. Setting the property ownership up as an LLC is more paperwork, and it does come at a cost (usually a couple hundred dollars), it is the easier of the two options. With an LLC, you are treated as an individual when filing taxes, you have the extra protection of the liability shield, and it is easier to sell your share in the property when you are part of an LLC. Tenancy in common is a lot less paperwork, and you save yourself some money up front by purchasing the house in this manner, but in the long run it could cost you. With the TIC, if someone is injured on your property, you and the others that own the home with you are open to a lawsuit from the person who is injured. This could cost you way more than the couple hundred dollars it would cost to file an LLC. The limited liabilty corporation protects you from having to pay out of pocket for any injuries that people may have on your property.
Divide Responsibilities
When you buy a Cape Cod vacation home with family or friends, it is important to come up with a plan to determine who is in charge of what in regards to the property. When setting up an LLC, this is required so that expenses such as the property tax for the home are divided properly whether it is a 50:50 ownership or 80:20. Setting up ownership as an LLC could save you from having what could be an awkward conversation with your loved ones since it is required and unavoidable. The agreement should cover how maintenance will be performed on the home (the contractors that will be used, who will meet them at the property), how utilities will be paid (is there a joint checking account everyone contributes to in order to cover expenses) and the rental portion if you do use this as an investment property. If you do decide to use the property for rentals, will you designate one person to handle the rentals or would you use a rental agency? For more information on renting your property, check out our blog, “4 Reasons You Should Rent Your Home with a Cape Cod Rental Agency.” The agreement that is reached between you and your loved ones will ultimately help come up with a plan to cover any issues that arise with the property, and assist you in covering all of the home’s needs before they happen so you are completely covered.
Calendar
It is important that once you buy a Cape Cod vacation home, a calendar is developed by you and your co-owners so that weeks and holidays are divided fairly. It is up to you whether you want split the time so that you have separate time at the vacation property, or if you want to overlap stays during the prime weeks. The Cape Cod prime time is the last two weeks of July and first two weeks of August. If those weeks are not a priority for you or your co-owners, it may be in your best interest to rent those weeks because you will get top dollar. The fourth of July is also a busy time on Cape Cod because some towns such as Orleans and Chatham have their own parades and fireworks displays, but it is not as busy of a rental time for tenants. The summer is the most popular time of year that people visit Cape Cod, however Cape Cod is beautiful during the winter months as well. There are holiday strolls throughout the Cape during the holiday season, which bring visitors every year. Creating a calendar with your family or friends who own the property with you is an important step in your co-ownership. If a calendar is established early on, there is less chance for disagreements and confusion later.
Buy a Cape Cod Vacation Home With Family or Friends
For these reasons, many people decide to buy a Cape Cod vacation home with friends or family to offset the costs associated with owning a vacation home and split the responsibility. If you and your family or friends decide to make the leap and purchase a property to share on Cape Cod, contact Leighton Realty to show you the properties that will fit all of your needs. Michael Leighton has been named the #1 Agent in Brewster since 2007 and the #1 Agent on the Lower Cape. Michael Leighton and his Cape Cod sales team have the knowledge and experience to find you the perfect vacation rental, and his team of rental agents can assist you in renting your property for top dollar. Check out Leighton Rental’s testimonials to see what their clients have to say about their experience at Leighton Rentals.
