If you’ve already achieved the American dream of home ownership, chances are you’ve moved on to another popular real estate fantasy: a cabin in the woods, a cottage by the sea or, perhaps, a palazzo on the lake. Vacation home ownership is more common than ever, and possibly more attainable than you think. A 2006 National Association of REALTORS® (NAR) report showed that second homeowners had a median household income of $82,800. Still, a second home is a major investment, for which you need to be fully awake. Take these steps to make sure you’re not sleepwalking into a second-home nightmare:
1. Think about it.
Are you going to be happy spending your vacation time in the same spot each year? Do you have time for the additional responsibility of keeping up a second home?
2. Think again.
You know you want it – now, can you afford it? The median price paid for a vacation home was about $200,000 last year. But don’t forget to include taxes, insurance, homeowner’s fees and maintenance costs when you’re calculating monthly payments.
3. Look closely at locations.
The average second home is 200 miles away from the owner’s primary residence. Unless you’ve got access to a private jet, you may not want to get much farther than that. Also, think about whether the location you are considering will still be desirable as your family grows older. Will your young kids still like it when they’re teenagers? Will the area’s healthcare facilities and support services still meet your needs when you reach retirement age?
4. Look closer.
Once you think you’ve pinpointed a location, be prepared to spend a significant amount of time there before you buy. The average second-home hunt takes seven weeks and six visits to different properties, according to NAR.
5. Consider renting.
Even if you don’t intend to offer your vacation home as a rental, it’s a good idea to buy a place that you could rent out if you changed your mind or if it became financially necessary. A rentable house is also more marketable upon resale.
6. Get a qualified expert.
NAR recently began granting Resort and Second-Home Property Specialist certifications to members who have completed coursework specific to the second-home sector. Look for a REALTOR® with that title, along with experience helping vacation homebuyers.
7. Get qualified yourself.
Just as when you bought your first house, it’s a good idea to get pre-qualified for a second-home loan by a mortgage lender before you start shopping. That pre-qualification letter will show sellers that you’re not just a second-home dreamer, you’re a second-home buyer!