Are You Considering a Vacation Home? In the November 2010 Coastal Living Magazine published an article by Money Magazine’s Amada Gengler about things to consider before purchasing a second home. The article was excellent and pointed out five main questions to consider before beginning such a search.
1. What’s your reason for purchasing?
- Price, personal use or investment.
- Many economists say the worst is over, but if you plan to stay in the home for five to seven years, you should be able to withstand a few minor dips in the hardest hit area such as Miami. Check out http://www.cnnmoney.com/housingforcoast to find out about pricing in the areas where you might purchase.
- “About 30% of second-home sales are all cash. Paying with cash increases your chance of scoring a deal – sellers generally prefer it, sometimes even if the cash bid is lower than others, because financed deals can drag on or fall through. For a mortgage in today’s environment, you’ll typically need a minimum of 20% down, and total costs for your primary and vacation homes should eat up no more than 33% of your monthly gross income, says Keith Gumbinger of mortgage publishing firm HSH Associates. Considering a condo? You’ll likely face even tougher guidelines. It is always a good idea to consult a mortgage lender before your house hunt.”
- The cost for insurance on vacation homes is typically higher than insurance on a primary home. In Florida, waterfront homes usually require flood and hurricane insurance. Even non-waterfront homes in Florida's coastal communities typically require additional insurance. In Sarasota, this would include homes and condos on the barrier islands of Casey Key, Siesta Key, Longboat Key, Lido Key and Bird Key. We always recommend that buyers contact the local tax department to verify taxes and consult your accountant with specific tax questions before making a purchase.
- Don’t ever plan on the rent covering the costs!
For a great selection of homes for sale in Sarasota, contact the John Allen Team at 544-6467. Our real estate agents will guide you to a successful closing if the Sarasota lifestyle is for you.