Are you looking for a vacation home?
According to the National Association of Realtors, vacation home sales rose strongly in 2013, jumping 29.7 percent to an estimated 717,000 from 553,000 in 2012.
Whether you’re shopping for the perfect spot for your own family to vacation or for an investment property you plan to rent out to others, it’s essential to do your due diligence to ensure that you spend your money wisely.
According to Christine Hrib Karpinski, author of How to Rent Vacation Properties by Owner: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment, values in many popular vacation-home resorts have not fully recovered since the market correction. As a result, they may present opportunities for both new-homebuyers seeking a vacation home, as well as for investors. Karpinski cites the Smoky Mountains, Las Vegas, Florida’s Gulf Coast and South Florida as markets in which buyers may find opportunities.
Buyers of new-construction vacation homes, in particular, have many options — and in many price ranges. For example, Ray Foral, president of Ridgeline Construction Group in Greenville, S.C., is building 4,000- to 7,000-square-foot homes ranging from $1 million to $3 million — or more — at the Cliffs at Keowee Springs, a community in the Blue Ridge Mountains of South Carolina. He says that most of his sales are to buyers who plan to personally occupy the homes and share them with family and friends.
Opt for Open Floor Plans and Flex Spaces
Foral recommends purchasing a vacation home with an open floor plan and large areas for people to gather. His homes have spacious family and dining rooms and extensive outdoor living spaces that allow guests to gather around an outdoor fireplace to socialize.
Foral also advises purchasers of new vacation homes to create a budget — and stick to it. “When you’re building a custom vacation home, it’s really easy to shoot for the stars and spend a lot more than you anticipated,” he says. “Keep your eye on the ball and think about how you will really use the home.”
If you plan to invite family and friends to share your vacation home, consider building in flex spaces as well. “When it comes to sleeping arrangements in a vacation home, flexible space is far more important than having a high bedroom count,” says Tammy Barry, director of sales and marketing for Heritage Harbor, a marina resort community 90 miles west of Chicago, where prices range from $160,000 to $550,000. “Look for a plan that allows plenty of floor space for air mattresses or sleeping bags or that can accommodate a pullout sofa to extend the home’s sleeping capacity.”
A loft is another flexible space that can become a bunkroom for kids, Barry added.
Additional Tips for Buyers
Consider Multifamily Properties.
David Staples, director of sales for four projects by Related Group in Miami, even suggests that vacation-home buyers consider a new product: designer suites, a creative new name for hotel-condominiums. “They are very well suited for people who want to use it part-time and want a higher-than-average return when they are not using it,” he says.
Staples says that while hotel-condominiums were not always the best investments in the past, the situation is now changing. “Hotel brands are getting more competitive,” he said. That’s resulting in unit owners being paid more when they place their units into the hotel’s rental pool.
Plan To Rent Out The Property
Always plan for the possibility that you might rent the property, suggests Karpinski. Circumstances change and your ability to save your investment might someday depend upon converting your vacation property to one that is income-producing.
Make sure there are no rules prohibiting the rental of the property. Not only could they prevent you from renting if you need to, but they might also impact the ultimate value and marketability of the property.
Create a Business Plan for Your Property.
Whether your vacation home will be owner-occupied or for rental, calculate the expenses for the property and be prepared for the unexpected. “In colder-weather locations, you should always have some money set aside to repair a burst pipe or a leaky roof, while in warmer weather locations, you may need to repaint or re-stain your deck and siding after it dulls,” says Charlie Young, president and CEO of ERA Real Estate in Madison, N.J.
Purchase in a Market You Actually Want to Visit.
Even if you don’t plan to use the property for your own vacations, it’s still essential that you visit it on a regular basis (at least twice a year, Karpinski recommends) to make sure it’s being properly maintained.
Location, location, location also matters for vacation homes. A house located 10 blocks from the ocean may be less expensive, but it can also decrease your resale price or ability to rent it.
Make Sure You Can Obtain Insurance for Your Vacation Home at a Reasonable Rate.
The cost of flood insurance for waterfront property, for example, may make it a very expensive investment.
A little bit of advance preparation and some due diligence will help you choose a profitable investment — or the perfect vacation home, sure to bring much joy to your family for many years to come.
Robyn A. Friedman is an award-winning freelance writer and copywriter who has been covering the real estate and housing industries for over two decades. She writes the “Jumbo Jungle” column for The Wall Street Journal, is a real-estate and personal-finance columnist for City & Shore magazine, covers celebrity real estate for the South Florida Sun-Sentinel and also contributes regularly to Commercial Property Executive, Multi-Housing News and numerous other publications.