Tips on Buying a Vacation Home
We've all done it: become so enamoured with a spot while on vacation there that our thoughts turn to 'what if"' -- prompting us to scour the real estate pages to explore the possibility of turning our favorite vacation spot into the place we enjoy the ultimate luxury of a second home.
While your instinct to invest in property in your favorite spot may be right on, we would urge that you temper your spontaneity with some due diligence to be sure you don't have expensive buyer's remorse.
Here are our tips to consider when exploring a potential second home purchase:
Distance: Take a hard look at the location of your dream vacation home town compared to your full time residence: how close it is to home? Easy to get to? Convenient to airports or highways?
Remote areas may be less expensive and more affordable -- but that is because they may be hard for most folks to get to. Even if you can and do make a trek to your second home, this could impact its resale should you ever decide to sell.
Utility: How to you envision using your second home? If you are active, make sure potential properties either have the amenities you seek or are in proximity to affordable clubs or outlets where you can participate in activities that make you happy.
Neighborhood Constituency: no property or community exists in a vacuum. Take a look a the other owners in the neighborhood (or the community at large in your initial research.) If many are part time residents, would this make you feel lonely or provided with more privacy? If deed restricted, READ a copy of the Homeowners or Condo Association documents, as not all are created equal. Some are tougher than others in terms of rules and regulations, making changes to your property and the like.
Check particularly on rent restrictions on length and times you may or may not rent your property, particularly if you intend to use rental revenues to offset your debt service or pay your overhead until you can use the property full time. Also check the state of the rental market with rental agents -- best advice is purchase only if you can handle the monthlies yourself, never assuming you'll have consistent flow of rental revenues. (Most resort areas have 3 mos. or so of 'peak' season that command the highest rates. Ask for estimates on what your property could command at varied times vs. having an annual lease tentant.)
Talk to locals. Just like finding the best restaurants, talking to locals can give you valuable inside scoop on trends, issues and areas of importance that you may not see in the area paper but need to consider in your purchase decision making process.
Make friends with an accountant and a banker. Without question, purchasing a second home is a major financial undertaking. Before you plunk down your hard earned money, talk to a banker as financing for non-owner occupied property is a whole different ballgame in terms of rates, downpayment expections and the like -- get options fromhyour banker and then dsicuss with your accountant implications of the purchase and various financing options on your taxes.
Talk to a REALTOR. Don't misconstrue this as a self-serving plug to elicit new business -- but a smart decision to seek advice of a professional who knows the area you're interested in, can advise about community property appreciation, new projects or community improvements that may impact your area of interest (positively or negatively) and what a fair market price for any property of interest should be, including how long its been on the market, what the sellers paid for the property and what the sellers' motivation ís. Bottom line: having a buyers agent represent you would give you a secret weapon to make sure you buy the best property suited to your needs at the best price!
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