Skip to main content

Tag: vacation home

Castles in the Sand

Is having two homes too much?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

This column is all about being careful what you wish for. Some people love their childhood home and long for the day they will inherit it from their parents. Others know if they just had that beach house their life would be complete. Well, I’m here to tell you that both dreams do not come as easy as you might think.

Inheriting the family home has been a tradition in the country for a century. It made a lot of sense to children who needed the space and location where they grew up for their new families. It wasn’t uncommon for siblings to make arrangements to buy out other siblings who wanted the property and, mostly, it was a good idea and worked.

Now, however, the family home may be worth a lot more than anyone in the family anticipated. Higher mortgage rates can make it impossible or impractical for any of the heirs to maintain the property or buy it outright. In addition, tax liabilities need to be calculated by a professional to determine if or when the best time to sell is.

If keeping the family home is a viable option for the heirs, then it might be a good option to use this windfall as a second vacation or investment home. Owning a second home comes with a long list of pros and cons, just ask any owner on Anna Maria Island. But, if you’re starting with a property that is inherited, you’re at least starting at the top of the pro list.

The biggest expense in owning a second home is financing it. Financing costs are typically higher for vacation homes with higher interest rates and larger down payments generally required. Fannie Mae and Freddie Mac have also raised fees for second home loans recently. If this is an inherited home, financing is not the issue, but there are plenty of other issues.

Coastal Florida, in case you haven’t noticed, is experiencing insurance premiums that are rising with shrinking options. The closer you are to the water, the greater your risk of flooding and wind damage in a storm, especially for older homes that may not have been built to current code. It’s certainly not impossible to get insurance on older properties but insurance companies are looking for new roofs at a minimum. In fact, you don’t even need to have a waterfront home for insurance companies to require a new roof before they will write insurance or give you a deadline for when that new roof needs to be installed.

Maintenance of a second home is always an issue, especially if the owner resides several hours or several states away. Maintenance companies will maintain issues in the home and check on it regularly if no one is there, but these services all come with a price. Renting a second home certainly is an option, but at the end of the rental, the property needs to be cleaned and checked for repairs. It’s a lot of work for owners and it’s not unusual for second homeowners to decide at some point it’s too much work for the time they use the property.

The flip side of this is the income that can be realized from second homes. Just look at the rental prices on Anna Maria Island. Again, consult your tax professional if you plan to use the property for both personal and business use. Every owner’s situation is different based on their personal use, the amount that can be written off and income.

There is no one answer for everyone. Owning a beachfront property or a ski-in, ski-out chalet may be your dream. Just be careful what you wish for.

Castles in the Sand

Is your dream a vacation home?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Owning a dream vacation home is kind of like owning a dream boat, until you actually own one. The idea of it is so exciting that you spend hours every day looking at what’s available to buy. You imagine yourself lounging away the day with little to do but enjoy the best decision you ever made. Well, guess what – it’s not that easy when stuff happens.

There are 7.5 million second homes in the United States, and for many of those millions of homeowners, their second homes have been an escape during the COVID-19 pandemic. But during normal times, owning a second home can become a burden as much as an escape.

Anna Maria Island (and the surrounding waterfront property in Manatee County) is one of the most popular regions in the state of Florida to buy a second home. Our beautiful beaches, pristine water and island charm have been attracting people from around the world for decades. However, owning a vacation property also comes with a litany of problems, especially if yours is set up as a rental property as well.

If you’re renting your property when you’re not using it or are just having someone oversee it while you’re not there, get ready for phone calls. Broken and leaking appliances, roof leaks, mold, air and heating equipment malfunctions, termites and who knows what other critters who may decide to invade your nice, quiet home while no one is there are just a few of the potential issues. And, of course, the Florida curse of hurricane season, where for almost half a year you will hold your breath and stay glued to the Bay News 9 weather cones.

Owning a vacation property has as much to do with your financial ability as it has to do with your personality. If you like being free and exploring different and varied places around the world, going back to the same beach house every year can make you feel stifled and unimaginative.

If your personality is one where you want everything working properly all the time with nothing out of place when you arrive, better rethink your decision. No matter how hard you try, something will go wrong, whether you’re renting your property or not, so maybe you’re better off being the one who rents, keeping your stress level down.

If, however, you’re pretty easygoing and want to find a second home for your family to return to every year and create memories, then a second home will fit your personality and lifestyle better. Getting involved in the community and making friends with local shop owners and restaurant owners will not only enhance your second home experience, it will also give you someone to fall back on if you have a problem getting local repair people, landscapers and housekeepers. Make it more than just your second home, make it part of your life.

If renting your second home is part of your plan in order to offset expenses, consult with your financial and tax advisor. As we know, tax laws have changed in the last couple of years and some of that may affect your personal tax position and frequency of personal use. Unless you live near your second home, hiring a property manager to handle rentals as well as maintenance will make ownership a lot less stressful. Many homeowners successfully use websites like VRBO and Airbnb for their rentals, but that requires being more hands on than you may want to be.

So, should you buy a second home for Christmas? There is a multitude of pros and cons involving finance and personality. Be honest with yourself, because, like owning a boat, owning a second home may not be that exciting once you get off the lounge chair. Stay safe.

Castles in the Sand

Falling in love with a second home

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

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:

One of our favorite topics

Floods, saltwater and freshwater

Taxes come and gone