Don’t make the mistake of buying a vacation or resort property or time-share on your first visit to a leisure destination. The lure of tropical winds, waves crashing on leisurely beaches and days of unstructured schedules can ferment into real estate shopping. Understand the many factors that influence you while you’re on vacation and resist the temptation to purchase. Discover what questions you should ask yourself before you buy that condo with the gorgeous sunset views.
Mark Nash author of 1001 Tips for Buying and Selling a Home offers valuable tips on how to control the impulse to purchase a second home while on vacation.
-Research home value trends, days on market and inventory of new construction developments. Look for consistent upward appreciation trends over at least the last five years. Study how long projects have been available. Inquire about the number of units that have been sold to investors. Watch out for red flags incentives or give-backs such as one-year free assessments or unit upgrades.
-Inquire about the real costs of owning property in another country or state. Are there local ordinances or annual inspections that must be met if you are renting to seasonal vacationers? If you plan to rent out your property while your not using it, read the homeowners association rules to see how often and the length of short-term leases they allow. Associations can limit the transient nature that you might be led to believe would create income to cover your monthly costs.
-Ask if the rental management requires your unit to offer clubhouse, pool and other amenities to seasonal renters as part of being in the rental program. Typically these memberships are expensive and could be a hidden cost that reduces your profits. Meet and evaluate any personnel that manage these membership amenities.
-Study the availability of direct flights out-of-season to your second home. Investigate local rental managers, housekeeping and maintenance contractors. Consider who will run the day-to-day operation when old tenants move out and new ones move in. Investigate marketing of your property, the Internet offers many vacation rental web sites that can offer you an inside look at your competition.
-Plan on taking a second and third trip to your home purchase destination before you buy. Stay at least one week each trip to get a sense of the community and it’s amenities. Walk through neighborhoods to get a first-hand feel for its residents.
-Consider how much you will use the property. Are you the type of traveler who likes familiarity or somewhere new and exciting? Vacation home purchases can be impulsive, but expensive mistakes, don’t be lured into a vacation home purchase easily.
If you do decide to purchase a second home, either a resale or new construction, here are some related tips.
-Have your own agent. Believing they might get a better deal or out of ignorance many buyers use the developers or sellers real estate agent to represent them. New construction or resale buyers should research what a dual agent can and can't do under their state real estate license laws. Most states require written acceptance of dual-agency by both parties. All homebuyers should be represented by an agent who has a fiduciary responsibility to them. Buyers shouldn't forget that most developers require that your agent must accompany you the first time you visit a sales center.
-Have an attorney review all contracts. Developers contracts favor the developer and are different from standard local real estate board approved contracts. Retain a real estate attorney to review all contracts. There is little wiggle-room once you sign a developers contract, and they don't like home sale contingencies.
-Ask how much is this model home as we see it. Models can be filled with every upgrade the developer offers as an example for buyers. Buyers should ask freely how much the model costs as they see it. Typically this cost will vary dramatically from advertised starting prices for a development.
-Perform a home inspection. Never skip or waive the right to a inspection, the benefits far out weigh the costs and could save you numerous headaches and expenses later. New construction is not immune from defects and lack-luster workmanship. Hire a professional, not one necessarily recommended by your real estate agent or developer. Perform the inspection at least seven days prior to closing.
-Require your deposits to go into an escrow account. Require all deposits and payments you make go into an escrow account, not the developers or real estate agents business account. Research state brokerage laws to discover what regulations developers and real estate brokerages must follow with buyers funds. If disputes arise it is easier to receive refunds from a neutral third-party or escrow agent than from a developer.
Mark Nash's fourth real estate book, "1001 Tips for Buying and Selling a Home" (2005), and working as a real estate broker in Chicago are the foundation for his consumer-centric real estate perspective which has been featured on ABC-TV, CBS The Early Show, Bloomberg TV, CNN-TV, Chicago Sun Times & Tribune, Fidelity Investor’s Weekly, Dow Jones Market Watch, MSNBC.com, The New York Times, Realty Times, Universal Press Syndicate and USA Today.