By Robyn A. Friedman
City & Shore Magazine
Are you thinking about purchasing a second home – a ski lodge in Aspen, pied-à-terre in New York City or subtropical paradise in the Keys? Well, now may be the right time to take the plunge – literally.
Interest rates remain low, making second-home purchases more affordable. Mortgage interest may be tax deductible, giving you a tax break. And, even though the median price of vacation homes is rising — the National Association of Realtors reported that prices soared 28 percent in 2015, the latest year for which statistics are available — they haven’t fully recovered since the recession in many markets, so now may be a great time to lock in a good deal.
“In the vast majority of places, prices are still below where they were in 2006, at the peak of the market,” says 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. “There’s still potential for appreciation, so it’s a good time to buy to diversify your portfolio.”
Here are some tips for those on the hunt for the perfect home-away-from-home:
Plan for the unexpected. Even if you now intend to use the property solely for personal use, you may someday want to tap its income potential. Karpinski suggests buying in a desirable vacation-home market — and one that is renter-friendly, without rules that prohibit short-term rentals. “The majority of people who buy a vacation home never intend to rent it,” she says. “But it’s a nice thing to have in your back pocket for any things that come up.” For example, Karpinski has known people who converted their second home into a vacation rental when they needed an influx of cash to help pay for college.
Make sure the property has ample sleeping areas for family and the inevitable guests, as well as sufficient open space for entertaining.
Consider multifamily properties as well as single-family. Condominiums require less maintenance than single-family homes, so they are particularly well suited for people who plan on occasional use.
Confirm that you can obtain insurance for your second home at reasonable rates. Homeowners insurance in coastal areas, or places subject to earthquakes, can be expensive. Factor in the cost of flood insurance, as well, for waterfront properties.