Saturday, January 1, 2011

Is it a good time to buy a second or vacation home and what should Iconsider?

The current real estate market is making conditions for buying a second or vacation home very favorable.  Many resort and vacation destination markets have an oversupply of home inventory at their lowest value in years.  This includes areas in Tennessee, as well.  A second home purchase is an investment.   The long term appreciation of value of the property can make a second home a good investment decision.  Buying now at a deflated price of a property could lead to sizeable increase in value in years to come.

Although the right second or vacation home is different for everyone, certain factors need to be considered are basically the same. Before purchasing a second or vacation home it is a good idea to research the location, types of destination, amenities and property value growth potential. In addition, it is important to know what to avoid and the type of property that is just right for you.

There are many things to research before you purchase a home, but the most obvious one is the location. You cannot do much research unless you know where to buy. Some who are new to the vacation market might consider a second home within a short distance to their primary residence with the intention of renting it out when they are not using the property. That way it is near for any maintenance needed.  If you choose to buy somewhere farther away, though, hiring a competent property management firm with a housekeeper and maintenance personnel is a must.

If you already own a second home and planning to buy another one, you might want to buy in the same market as your current vacation home since you are already familiar with the area. However, this does not allow diversification or a variety in your family's vacation. So some families choose a ski resort or beach property to have an option of getaways.

Once you have settled on an area for your second or third or fourth home, you have to research why buyers prefer that area. Research the prices in the location you have chosen to make sure it will not break your bank. It is also important that you consider your family's interest on the particular area. Do not buy a house located in an area that you least like. If you buy a house that you love you will really enjoy spending your time to relax there.

The type of location depends on the location. You have to choose whether you want a destination that is remote or popular and the type of renters that would possibly be renting it when you are not occupying it.

There are also different home amenities that home buyers need to take in consideration. If your home is in an area where most homes include a hot tub, for example, then that is something you need to take into account. Having a game room included as an amenity is a good idea especially if you plan to rent your second home to families. Any amenity added as a feature to your second home should consider the type of climate of the area. For many buyers, the view is already considered an amenity. A home with a view can cost more, but can also increase the value of the property in the long term.

Lastly, before you purchase a second or vacation home consider the property value growth of your target property. Your Realtor can help you with this regard. Do not hesitate to ask and inquire any pertinent question regarding the prospect property.  Also, keep in mind there are federal income tax deductions available for most second homes.  They are similar to your first home deductions including mortgage interest expenses.