It’s almost June and I love this time of year in the White Mountains! The summer is starting, the weather is finally warming up, kids are almost off of school and I start to hear a lot of people talking about vacation homes. Do you want to buy a vacation home, a second home somewhere? Maybe a ski condo or maybe a house by the beach on Conway Lake. There are many questions come with that idea. So today I have three things for you to consider if you are having thoughts of buying a vacation home here in the White Mountains.
Can You Afford A Vacation Home?
The first thing to consider is if you can truly afford it. I know the excitement of buying a second home can sometimes outweigh the thoughts of what it will cost you. But it’s really important to think about can you truly afford it. A lot of people approach the purchase of a second home if they haven’t done it before like they approach the purchase of their first home and it is a completely different animal. We can’t think of it that way!
So it’s likely if you’re buying a second, vacation home you’re going to have to put a higher down payment. In fact, it could be as much as putting 20% down on this home; and more than likely you will have a higher interest rate on that loan than you would on a home if you were buying it as your primary residence. Of course, there are a lot of variables there and I’m not a mortgage broker, so I would highly suggest that you consult with yours before considering this purchase anyway. If you are looking for a good mortgage broker here in the North Conway area, feel free to contact me for a recommendation.
What Are The Extra Costs?
If you’re having thoughts about buying a vacation home you are probably wondering what all the extra costs are that you’ll have to deal with. Vacation homes come with extra costs that you need to consider upfront before you even start touring different properties. If you’re going to rent the property, then you’re likely you’re going to have to pay for a cleaning company between tenants. So you’ll need to figure out what that would be. What would your property management fees be if you’re not able to manage the property on your own? That can be a hefty responsibility, a lot of phone calls and a lot of dealing with maintenance items and things like that. A good property management company can handle that for you. But that comes at a fee, a lot of times 20% of your profit, so that is a big cost to consider if you’re thinking about renting this property out.
In addition, there are several “expected amenities” that you’ll want to think about adding to the property. For example, many renters in this area expect that a vacation home they are renting will have internet / Wi-Fi. Typically this will run you around $65 per month (at the current internet rate with Spectrum). You may even have some pickier renters that will expect in this ski town that a lot of renters are going to expect you to have ski gear. The last thing to consider is this is a full home that you are buying and even though many times second homes come furnished, it’s not guaranteed. People tend to furnish their primary residence little by little but for a vacation home; you’re going to have to furnish this to really get it up and running. So that could be a really big price tag depending on the vacation home you buy. So all of those things are good things to consider upfront.
Why Are You Buying The Vacation Home?
If you’re having thoughts about buying a vacation home be clear with your intentions right out of the gate. Why are you buying this property? Is it a family retreat for you that you plan on never renting out and you just want to have it, or is it more of an investment as part of your bigger investment portfolio. It’s really important to be clear on that upfront so that you can consider all of the factors involved in each decision. So if you’re thinking about it as an investment, then I would meet with your financial advisor.
I would also meet with a local agent who knows a lot about return on investments of similar properties. You really need to analyze this in terms of comparing this to another investment with a similar amount of money. Then think about what is your return on this investment of the second home purchase versus another type of investment with the same cash? What is your return and how does it compare because is it really a smart decision for you to invest in this way?
If you’re thinking about going the other direction and if this is a family retreat for you. Then I strongly invite you to come stay up here in a few different places and learn about different locations. Stay in the White Mountains frequently and make sure that you like this place enough to be able to have a second home here. It’s important to also consider if you would be spending more time here in the winter or in the summer. Should you look for a house by the lake or a house in the mountains?
Conclusion
I didn’t write this article to detract you from buying a vacation home here in this wonderland, I promise you. But I want you to enjoy your time here and I think one of the best ways to do that is by being realistic about some of the things that you may have to think about when buying a second home.
One of the best parts about buying a vacation home here in the White Mountains is that you get to enjoy both the Summers and the Winters. That’s a benefit that can’t be overstated enough! I hope you found value in today’s post. I hope you come back here to find out more about buying a second home here in the North Conway, NH area. I’d be happy to answer your questions, so feel free to contact me anytime.