- Have you dreamed of owning a Hamptons Home? Those who have weathered the recent recession and remain fiscally sound may be in a position to benefit from the current vacation home real estate market.
In certain parts of the country, an over saturation of real estate and a shortage of qualified buyers have resulted in lower median prices on vacation homes. Some areas have also seen a wave of foreclosures and short-sales.
Do think carefully before you venture into second home ownership. (kelloggforum.org)
Many foreclosure properties are due to individuals finding themselves underwater with ballooning mortgage payments. There also are a fair number of properties available that were held by developers unable to sell vacation homes on spec. As a result, in some areas you can find price-reduced vacation homes at the higher end of the spectrum along with a variety of modest cabins and lake homes.
Keep in mind, there are risks associated with buying a foreclosure property. Don't be surprised to find broken windows or appliances or worse, since maintenance often falls to the wayside when a homeowner is unable to make payments. Be prepared to put additional money into repairs. If you aren't handy yourself, you may want to enlist someone who is familiar with your properties, to help you evaluate potential repair costs.
When you're ready, consult a reputable realtor to learn about available foreclosure properties in your area. If you prefer to do the legwork yourself, explore web and print resources for current lists of foreclosures, which become public when they are filed in your state. Some savvy buyers are contacting banks directly to express interest in purchasing a foreclosure property while bypassing the more lengthy purchasing process. Purchasing a bank-owned property tends to be less risky because you can be confident the property has been vacated and is available.
Do think carefully before you venture into second home ownership. The recent downturn showed how important it is to stay within your means and be prepared for unexpected changes in your earning capacity or the performance of your investments. Therefore, before you take on an additional financial responsibility, you need to be confident of your ability to make a second mortgage payment. That means you must have a strong credit rating, a solid bank account and a steady income source. Visit your banker and get pre-approval for a second mortgage so you can act quickly if a desirable property becomes available.
An experienced financial adviser can help you evaluate your financial health and determine if you can afford a second home and stay on track with your long-term goals. Make an appointment today and then take advantage of the opportunities that are out there to realize your dreams.
Rocco is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Southampton, NY. He specializes in fee-based financial planning and asset management strategies and has been in practice for over 13 years.