Things to considering when buying a second home
If you’re considering a vacation home, then now, more than ever, you will want to weigh your decision carefully. A slowdown in the economy makes each financial decision, especially large ones weigh more heavily. However, that same slowdown can also make considering a vacation home a fantastic deal if the right one is found. Our staff has had more than 20 years of experience in the Branson real estate market, one of the leaders in vacation home growth. Read on to get our perspective to help you make the right second home decision.
It may be astonishing, but a surprising number of Americans can afford to pay cold cash to consider a vacation home. Almost half of all investment buyers, and about 30 percent of typical vacation homebuyers, still pay cash for those second homes, according to studies conducted by the National Association of Realtors (NAR). The NAR found that many of these vacation home purchases were made as a way for investors and individual consumers to diversify their asset portfolios. But in this era of frightening economic uncertainty and global financial turmoil, it’s hard for many Americans to believe that people have cash that they’re willing to convert into vacation homes.
According to the National Association of Realtors, the average investor who purchased a vacation home last year was 46 years old. Traditionally, this is someone who is perhaps in their peak earning years and is looking toward retirement in the next 10 years or so is likely to take advantage of the current housing market. These are people who are trying to put their assets in place now, are considering a second home, and are realizing that the low prices can give them the lifestyles they’ve envisioned.
Be careful not to take the connection between retirement and second homes too far, however, as many middle-aged Americans have experienced a significant drop in equity through 401k losses and the roller coaster that has been the stock market. Always consider a purchase like this while keeping the full range and possibilities of your future income in mind.
An important thing to think of when you are considering a vacation home is how you plan to use it. If your second home will be used only as a vacation getaway, the needs you have – and the decisions you’ll make – are very different than when buying a second home for investment purposes. If you plan to use a second home both for vacationing and for rental income, there are further considerations, particularly with regard to tax status. If you’d like to discuss some of these considerations further in depth, you can contact a real estate professional, such as our Branson, Missouri Real Estate team and they will be happy to take you step by step through all the factors.
New research by the National Association of Realtors suggests about 47,000 second home purchases a year now involve equity drawn from a first home, up more than 60% from the pre-2000 average. First-home equity plays a bigger role in acquisition of a vacation or rental house than do stock sales, inheritances, gifts or proceeds from the sale of other assets, the NAR study says.
Considering a vacation home can be a rewarding experience. Planning ahead and going into the process aware of all the options can make for a less stressing and more enjoyable experience. More articles are on the way that can guide you step-by-step through the vacation home buying process.
- Second Home Condos – Oftentimes having a condo for a second home makes a lot of sense. Find out what questions to ask and what to watch out for in a condo vacation home.
- Financing Your Second Home – Financing a condo as a second home has some differences from your normal home financing. Get tips to navigate this unique situation.
- Buying a vacation home comes with different rewards and issues when compared to buying investment real estate. Find out more of these differences with the help of our experts!
- Vacant Residential Lots – If you choose to build your home from scratch, learn about buying the perfect lot for it–affordably!
- Should I rent out my vacation home? – Once you’ve purchased your vacation home, what then? Consider renting it out to supplement your income and make your leisure property work for you!