A Second Home: Take it or Leave it?
For many, wanderlust is just a part of life. You buy a beautiful home somewhere, settle down, have a family, but there is always a part of you that’s itching to get away. Vacations are part of that wanderlust; the chance to get away someplace beautiful. And then you see it. The local newspaper at your vacation destination, and lo and behold, there is a real estate section right there.
Dare you even look? We’re in a deep recession. But then you think of your savings – it might take care of the down payment, but what about the monthly payments? You can’t afford it, can you? Two homes? Is dual home ownership for you?
A second home may work for you, but you have to go into the process knowing what to expect. If you’re looking to get rich quick, don’t count on it in today’s market. But things will get better, and it’s always the early bird who gets the worm. The question is how early? And where are we in this recession?
According to recent data, the price of real estate in areas that are deemed “Vacation Markets” had risen twice as fast as real estate in other areas. But, like other real estate, prices have dropped dramatically. There are some real deals out there – some as low as 40% or 50% off previous prices.
A second home in your destination of choice will still cost you a pretty penny, but it’s no longer a well-kept secret anymore that money is tight, and the chances of you flipping it to make a quick buck are slim.
The best piece of advice a possible vacation home buyer can heed right now is to buy for love not for money. Recent sharp downturns in vacation markets like Naples, Florida, Lake Tahoe, Nevada and Cape Cod, Massachusetts, have shown that trying to turn a profit in a vacation market is close to impossible. But there is a bright side to all of this. With the housing bubble going poof all across the country, those that are looking to sell will be doing so at lower prices. Now could be a great time to buy a place that you’re planning on keeping for a long while.
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But how do you know if you have your head on straight about the whole SECOND HOUSE thing? Well, take some time and evaluate the pluses and minuses of buying another home. Once you’ve decided on an area, spend some time there to make sure you like it. If it’s going to be a vacation home, you’ll want the scenery to be relaxing (if that’s what you’re looking for) or exciting (if that’s what you go on vacation to experience). A final check should be the bottom-line cost. If the price of the two houses makes up more than one third of your total income, you’ve spent too much. People with more than 38% going into the home are being bailed out.
Buying property is a huge investment for everyone, even the rich. Take the time to properly evaluate the pros and cons before you decide to own a second home or you could find yourself on a permanent vacation.
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