Advice on Buying a Vacation Home or Second Home
Vacation and Second Home Properties
Whether you are considering a vacation or second home for a weekend escape or a family legacy property let your Exclusive Buyer’s Agent (EBA) guide you through the decision making process as well as the transaction assuring a smooth and enjoyable experience.
Many of these properties are located in resort areas not in the same State or region as your primary home and are subject to local restrictions, taxes and regulations. Dealing with homeowners associations, management companies, local lending, Insurance, covenants, building regulations, Title issues, well permits, weather conditions that might affect value, transportation and technology options can all be a challenge particularly if you are trying to deal with these issues from a distance. Often times your EBA can show you how you can turn these possible pitfalls into advantages with their local knowledge and expertise.
Your EBA wants you to enjoy your vacation or second home property bringing you and your family great memories for years to come. By using your EBA as a resource before, during and after the transaction with their attention to detail and guidance will allow you this opportunity.
Many second home owners find that condominiums are an attractive property type for a variety of reasons. They allow more time for enjoyment without a lot of worries like maintenance and daily tasks. They can also offer amenities that are not easily available to single family home owners like swimming pools, shuttle services, game rooms, etc. In many areas the possibility also exists that your unit can be rented out to tourists on a nightly or weekly basis helping offset some of your ownership costs. Naturally there is a fee for all of these services but since the costs are shared amongst all of the owners may make it more manageable for the individual owners.
All complexes should have a Home Owners Association (HOA) and in many states it is required. In most cases the HOA contracts with a management company to handle the day to day items needing attention as well as provide a reservation service to manage the rentals. In most cases the HOA meets annually to discuss items pertaining to the property and the management of those items. It is important prior to ownership to understand how the HOA functions and what their contractual relationship is with the management company. Review the HOA financials, Rules and Regulations and, at least, two years of HOA and Board of Directors meeting minutes. Often these will not be released to you until you have a unit under contract. Meet with the President of the HOA as well as the property manager to better understand if this is a complex that appeals to you. Remember also that once you are an owner you are part of the HOA and part of the decision making process.
HOA dues can cover a variety of items and it is important to understand what those items are. Dues can cover trash service, water, common amenities such as hot tubs, television, exterior building insurance, lawn and driveway maintenance, etc. HOA dues may be collected on a monthly, quarterly or yearly basis.
Most management companies provide the HOA a ten or twenty year forecast of what maintenance issues might be upcoming like replacement of roofs or sidewalks and the approximate costs involved. This is how the HOA can determine the HOA fees to the individual property owners (usually allocated on a sq. ft. basis). If the property is in a short term rental location they will most likely manage your unit and take care of guest check in, cleaning and maintenance. Their fee is a percentage of the rental income. Find out what this percentage is and what they provide for this fee.
In situations where short term rental income of your unit is possible the management company may inspect and rate your unit annually. The management company’s desire is to attract as many return guests as possible so they generally rent the nicest units first meaning more income for the owner (and perhaps more wear and tear). In many instances the management company has someone on staff that can guide you through the cost benefit or upgrading your unit. Find out what your unit is rated and if there is a benefit to upgrading the unit. Also get rental income figures for like units understanding that individual units may vary due to location within the project and owner usage.
Single Family Homes
Whether your desire is to own a secluded cabin in the woods or a home on a golf course, beach or ski slope determining your needs and how you plan on using this home are essential to your selection process. Will you be using this property seasonally or just on weekends, as a gathering place for friends and relatives for holidays or simply an escape from the stresses of everyday living? Emotions play a large part in your property selection, as it should. However don’t allow your emotions to be the overriding decider.
There are many factors that need to be considered to insure that you will be able to enjoy your escape property. Most important on this list is what will happen to the home when you are not there? What attention to the home might be needed in your absence?
The benefit of single family home ownership is that you have more flexibility on individual choices. The challenge is more daily attention may be required. There are management companies who specialize in caretaking of single family homes and many offer a menu of options. Understanding the costs and paring down what you need or desire will help you determine what the costs might be. Also understanding local zoning regulations and common interest community’s rules and regulations might determine if this home is appropriate for your desired use.
Other determining factors might be property taxes (some states charge higher property taxes on out of state owners), utility costs, transportation costs and options. Local issues such as snow load or flooding, pest control or mold are also vital pieces of information. Once under contract an inspection should be conducted and in many areas of the United States radon can be a factor. This is relatively simple and inexpensive to mitigate and often something the Seller will pay for.
Perhaps instead of purchasing a pre existing condominium or single family home your desire is to build your dream home. One might think that land would be fairly straight forward to purchase. However there are many things to think about particularly as you move forward to building that special home. Again, understand the covenants of the neighborhood and what you can and cannot do on your property. Are there Square footage minimums or maximums? Perhaps there are architectural guidelines or an architectural committee that must approve your design and finish.
Be sure and negotiate the seller providing you with a survey. During your inspection period it might be a wise idea to have an engineer conduct a soils test to see how easy or difficult it will be to build on the site. Is the municipal water and sewer? If so are there tap fees to hook on. If municipal water and sewer are not available is it possible to dig for a well and at what cost? What type of water is generally found in the area? Check to see if the local regulations allow for a leach field or merely a sewer vault and determine what the cost is to pump out the vault. What is your source of heat? Check to see if natural gas is available or if you need to go with an individual propane tank. Understand the plusses and minuses of owning or leasing the tank.
Interview a local architect or two who can give you an approximation on a dollar per square foot basis on building in the area. Check with the City or County building department to see what the set-backs are and if there are any governmental regulations that you should be aware of.
As you can see there are a myriad of issues that need attention and direction to insure that your choice of product type will bring you and your family the enjoyment of ownership and usage that you are seeking in a second home or vacation property. Particularly if you are attempting to do much of this from afar the task can be daunting. Remember that you are not alone in this process. Your EBA is here to help you navigate through the issues and process until your purchase comes to fruition. In most cases your EBA will continue to be a source of information and advice long after your purchase. Isn’t it assuring to know that you have a trusted advocate in your corner and on your side?