Last week we had a conversation about financing second homes and some updated government regulations about renting. We even touched on the pending Florida legislation regarding short-term vacation rentals, but this week we’re going to talk about the practicality and affordability of second homes and falling in love.
Vacation homes are the ultimate discretionary purchase just above recreational boats. The one thing both of these big-ticket items have in common is the emotional aspect that manifests itself by the warm tingle that overwhelms you when you set eyes on the object of your affection. But be careful, it’s dangerous to fall in love so quickly and requires a great deal of vetting.
A vacation home should make you feel like you’re on vacation when you walk in the front door. You don’t want to step in and notice the peeling paint, mold or the ancient appliances. You also don’t want something too big or high maintenance that it infringes on what should be a relaxing time. Technology will make some of this easier to manage as well as making your property more secure when you’re not there. You can control the heating and cooling, unlock the doors should a contractor need to get in and set up cameras to see if something looks not quite right.
That said, if you’re finding your vacation home overwhelming then your future buyer will feel the same way. Vacation homes live by an entirely different set of criteria than your full-time home. The location should be the prime motivator in making a second home decision and worry more about views, beach access and walkability than the quality of schools. According to the National Association of Realtors, the most popular vacation home locations are resort areas and beach locations which account for 66 percent of the market.
If you’re considering purchasing a vacation home with a partner or partners here are a few points to consider. What is each partner’s usage schedule? Unless you are really cozy with your partners, you need to carve out some private time for you and your family. Also, are friends or family of one the partners always welcome even if the owner is not with them? Should the property be rented part of the year to cover expenses and how will the maintenance costs be managed? And who gets the final say on picking upgrades like paint color, furniture or air conditioner and appliance replacement?
And the biggest consideration is what if one of the partners wants out for personal or financial reasons? An escape hatch needs to be developed and agreed on by all partners before purchasing. Some of the things to address are the timeframe, the minimum number of years to own and a buyout arrangement or selling the property.
Finally, many Florida second homeowners decide to convert their second home to their full-time residence for tax purposes. This option is becoming more and more popular as taxes in northern states continue to go up. Keep in mind that the state of Florida has a very advanced way of keeping track of how long Florida residents spend in another home they own, so keep good records since the burden of proof will be on you.
Pretty soon we may all need vacation homes to relax since I recently read that 6,000 new homes will be built on the north side of Manatee County. Our quiet little corner of the world is no more, but at least we all fell in love at the right time.
More Castles in the Sand: