The market for second homes in the US is booming. Whether you're thinking about buying one as an investment or a vacation home for your family, you're not alone. According to the latest study released by the National Association of Realtors®, there were a record 2.82 million second homes sold in 2004.
And what's probably more important for you to know, is that the market looks to remain strong, according to David Lereah, Chief Economist for the NAR. "Because the typical second-home buyer is a baby boomer, it's likely over the next decade that second-home sales will remain historically high," Lereah said. "The boomers are still in their peak earning years and have both the wherewithal and the desire to purchase vacation homes and investment properties."
So how do you get started on the path to buying a second home? In this article, we'll cover three steps essential to your purchase.
Step I - Get clear on your motivation
There are a lot of different reasons for buying a second home. But typically people are looking for one of three things: a vacation home for use by themselves or their family; an investment property that will give them a nice return on their money; a future residence that they can retire into down the road.
Actually, there is often a good amount of overlap across these reasons. For example, plenty of vacation home owners are looking for a return out of their property, through some rental income, appreciation, or both.
But it's important you decide on your primary reason for buying a second home. That will help you not only narrow down locations, but also make decisions after the purchase.
Answer this question before you go any further. What is the most important aspect to me of owning a second home?
1. Having a place for my family to vacation?
2. Making a great return on an investment?
3. Giving myself a good potential place to retire to?
4. Other?
Step II - What type of property best meets that need?
Now that you know your big motivator. It'll help you focus your search, if you understand what types of properties are available, and which best meet that need.
Are you looking for:
· A single family home with plenty of room for you and your kids?
· A condo in a larger complex where there's usually a lot of rental demand?
· A new, poolside unit (maybe one that hasn't even been built yet) in a resort type community?
You don't necessarily need to pick one type at this stage of your search, but it will help you to understand and think about the pros and cons of different types of second homes. Tie this into your primary motivation for buying the home.
Step III - Build a list of locations to consider
The world of options for where to buy a second home is limitless, especially if you live in the Bay Area. So it really helps to get some different ideas down on paper and then go out and see them in person. Walking the streets, eating in the restaurants, swimming off the beaches…these are the best ways to get a feel for the right location for you.
Again, don't forget what your primary motivation is. If you're really looking for a home that you can one day lay your retirement roots down in, we'll bet that different aspects of a location may be important to you than if you were buying a vacation house to take the kids.
Let's say for example, you're thinking about future retirement property:
· What areas have the right leisure activities to keep you happy (golf, culture, wineries, etc)?
· Is there an active senior community there?
· What are the transportation options like?
· How are the medical facilities?
Develop a short list of towns & areas that feel right given why you are buying. Then go visit them!
How to get started
This guide has only given you the tip of the iceberg. Buying a second home can be a complicated experience, but it should be fun! Here are some tips to help you get your search underway:
1. Do your research. There are a lot of resources online today, and some even geared specifically to buying second homes. For example www.escapehomes.com provides a lot of free resources for second home buyers, including discussion forums, buying checklists, and area information.
2. Find a Real Estate professional who has experience with second homes. The right agent or broker will make your search for the perfect property more efficient and more fun.
3. Get out there and visit some markets! There's nothing like seeing the area, and the homes for sale in it to give you a jump start.