Finding the Keys to Your Vacation Getaway

What to Know About Buying a Second Home

A couple staring through a see-through glass. The man is behind the woman and they are both holding a mug of coffee.

Above: Before you can hold the keys to a vacation getaway, you’re going to need to ask yourself the key questions involved in owning and buying a second home.

So you’ve already gone through the process before. You’ve bought a home, you’ve established yourself financially and now you’re ready to celebrate the rest of your life by buying a vacation home.

The rest should be a breeze, right?

Well, before you can jump into the waters at your lakefront property or hit the slopes from the backyard of your Rocky Mountain getaway, it’s critical to weigh the differences between primary homes and vacation homes.

If you really want to hold the keys to the perfect vacation pad, you should probably ponder these key considerations involved with buying a second home.

Key #1: Answer the Why, Where and How Questions

Just like with buying your first home, buying a second home is all about asking yourself important questions.

The first, and perhaps most important, question you should ask is “How do you plan to use the home?” Whether that it’s for retirement, closer to the water, the mountains or you just want a place that’s away from all the hustle of city life, it all revolves around location.

“The first three rules of real estate still apply: location, location, location,” says Glenn Phillips, CEO of Lake Homes Realty, the nation’s largest lake-focused real estate company.

Looking into the area of your second home is imperative, both for your own benefit and for resale value.

“Don’t just make a weekend visit and buy. Go rent or visit friends and test drive the experience,” says Phillips. “Many people believe they know what they want but are really guessing, so do some research of the experience firsthand.”

He also suggests scheduling an appointment with a local agent or expert on the area who can inform you of any surprise issues or common “gotchas” in the region. For instance, if you're looking into lake homes, talk with someone who can give you information on seasonal water levels, water quality, shoreline regulations, lake use permits, etc.

Finally, consider the amenities and features that are must-haves for your second home.

“You need to ask yourself what kind of home will best serve your needs and lifestyle,” says John Stevenson, director of sales at Watersound Origins in Watersound, Fla., which offers its own amenities, like a resort-style pool, hiking trails, a golf course and easy access to Florida’s Emerald Coast. “Buying a second home in a community with amenities is great because it is social, convenient and cost effective.”

Commonly in second homes, the physical features aren’t always of the highest importance. “We don’t spend a lot of time talking about sizes of rooms, we focus on what they’re going to be doing when they’re down there,” says Tammy Barry, director of sales and marketing at Heritage Harbor Ottawa Resort in Ottawa, Ill.

Once you know why you’re buying your second home, where you’re buying it and how you’ll be using it, you’re one step closer to unlocking the door to your perfect vacation getaway.

Key #2: Consider the Non-Vacation Time

In the exciting rush of planning to buy a vacation home, you may forget one thing: you’ll only be there so many days out of the year. Who’s going to maintain the home while you’re away in the real world?

“Maintenance is a huge discussion, because we all work hard and that’s why we buy a vacation home,” says Barry. “One advantage of buying in a resort community … is that (you’ll get) lawn care, landscaping and snow removal,” so you don’t have to worry while you’re away.

Whether or not you live in a maintained community, homeowners can also minimize home maintenance by choosing durable exterior materials for their sidings decks, opting for hardwood or laminate floors over carpet and installing “smart” gadgets like the Nest thermostat, which allows homeowners to control the temperature of the home and monitor for hazards like smoke and carbon dioxide. Also consider a water leak detector to monitor any issues with water heaters and other plumbing.

Security and safety is another vital consideration to keep in mind for the times in the year when you’re not vacationing.

“Many developments have on-site security or work closely with their local police department because they realize residents are not there full time,” says Barry.

Barry also suggests installing a keyless-entry lock, allowing homeowners to monitor for intruders and wirelessly change codes for cleaning staff, repairmen, guests or renters.

Which brings us to the next point: Renting is one option for maintaining your second home, not to mention it adds a little extra income.

“(Renting) is a great way to offset the cost of ownership, but buyers should make sure they’ve thought through everything that goes into marketing, managing and maintaining a rental property,” says Barry. This includes being the go-to person should there be any issues or fixes that need to be done and will ultimately be responsible for repairs in a timely manner. If you hire a manager to deal with those issues, don’t forget to factor in the cost.

Key #3: Develop a Financial Plan

Nothing great comes without a little sacrifice, so to obtain the third key you’ll have to put those math skills to the test and develop a financial plan.

“Just like your primary residence, you have to understand the total price of ownership, including property taxes, insurance and any other carrying costs,” says Stevenson. “Even when you’re not there, you still may be being charged for water, gas, electricity, trash removal, landscaping and other maintenance services, so be sure to include all these overhead costs into your budget.”

Once you know your budget, it’s probably time to speak with a home financing expert.

“I would suggest speaking with a financial advisor and CPA about implications on your long-term financial plans and to consider any tax consequences,” says Stevenson.

Those tax implications can vary significantly based on your financial situation and whether or not you plan to rent, which is why it’s crucial to speak with a professional who knows about the area, as tax rates vary location to location and state to state.

“It’s also important to know that lenders may have additional requirements or income thresholds,” says Phillips. “As with any home purchase, prior to making any mortgage application, it is important not to overextend credit usage, not to make increases in other credit lines and to have financial records easily available to speed the review process.”

Last, whether you plant to retire there or not, it’s also essential to consider the resale value of the home.

“Location in typical second homes can impact value more than a primary home in the city or suburbs,” says Phillips. “A mountain-view, lakefront or oceanfront home will be much more valuable than a home just a half-mile away. Consider the lot and the location’s impact on the home — a $350,000 home in a quiet suburb may cost $500,000 in a great location, as the lot value is so much greater.”

So now that you have the keys, are you ready to get away?
Drew Knight is a freelance writer for Builders Digital Experience (BDX). You can find him online at LinkedIn.

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