Are you looking to Buy a Vacation Property in South Florida?
You may be considering buying a second home in another area, whether it’s to enjoy warmer climates and amenities or any other area you would like to spend more time in that just vacationing.
It’s probably a good idea to take a few vacations in the area where you think you want to buy – and at different times of the year – before you actually purchase. You may find after spending more time there that you really don’t want to own a property that you might only visit a few times per year. In Florida many people do seasonal rentals for a few months over the winter before buying a home, and it is also less costly initially.
Here are some key points to consider:
Location and Market:
- Get thorough Local Information: With a long-term horizon in mind, it’s important to make sure that the home you buy lives up to your expectations. Residential real estate is an intensely localized business and many vacation home buyers buy outside of their local area. So it’s important to do some homework and find a real estate agent from the local area that can guide you and provide you with information about neighborhoods, market prices and the pros and cons of particular properties. You will also want to know about price histories, comparable sales and resale scenarios.
- Check out the condition of the local market. Is it a buyer’s market or a seller’s market? Which homes are selling and why? Is there a lot of inventory? You usually can’t go wrong if you buy the type of home that is in high demand.
- Are there any natural hazards to be aware of such as flooding, hurricanes or forest fires? Can you get insurance for these hazards and protect your investment?
- If you are buying a home that is a long distance from where you live, you should also inquire about property management resources. If you are in a planned unit development there may be options that include onsite management. If not, you can hire someone to periodically look after your property when you are not there.
- Factor in Additional Costs: If you want to hire someone to check your home or condo to make sure there are no water leaks, frozen pipes or other problems.
- Insurance for Second Homes: This may be more challenging than for primary residences. You will need additional flood insurance if you are buying near the coast.
- Paying for 2 Mortgages: You have to be able to qualify for 2 mortgages. Financing for a second home typically requires 10 to 20 percent down payment, and of course you have to meet credit standards and debt-to-income requirements, and provide documents for income and asset verification.
- Fees and Carrying Costs for Vacation Homes: Make sure you understand all the fees that will you will incur with your out-of-area-purchase. Florida has transfer taxes for second homes as well. Property taxes will run higher here for second homes because there is no cap for increases in assessments each year as there is on primary residences. Make sure you understand how they can increase. You may also have lower primary residence taxes in your area, so you should be aware of how they compare to your main home.