6 things to consider before buying a second home
The no-going-back moment is forever etched in my memory. My husband, DC, and I were standing in the kitchen when our Realtor, Saint Bob, called. I put him on speaker.
After four months of looking at beach condos, of flirting off and on with the idea of buying a getaway that we could also rent out, we finally had an offer in play. The sellers, Saint Bob said, had accepted it.
DC and I locked eyes. The question hung between us: Do we do this? We mentally replayed all the hypothetical discussions we’d had about this, talks where we’d reasoned that this was the time, now that the kids were on their own, and while we were both still working. It’s now or never. We’d rather have tried and been sorry, than never tried and wondered.
I nodded. DC told Saint Bob to send the contract.
Never mind that this was the first time in my adult, self-supporting life that I felt financially under control. I needed to mess that up.
We started looking in July. Saint Bob took us to see over a dozen condos and sent links to many more to view online. Some were nice, but lacked the ocean view we wanted. Some had the view, but the complex was rundown. Some needed too much work. Some were too small. Some were too dark. One we liked was about to undergo a two-year construction project that would involve boarding all the windows. Another was in a complex that discouraged renters. Although buying a second home that you don’t have to rent out to offset the costs is a lovely luxury, we’re not those people.
We made an offer on one place, and heard nothing back, no counter, no refusal. We later learned that the owner of the next-door unit bought the condo so he could have two side by side. The sellers only listed the condo to establish a market value, so the neighbor could pay the “going rate.” We were used.
Discouraged, we told Saint Bob we were taking a break. He understood and assured us that even if we never bought a place, he had enjoyed getting to know us. Getting to know us? Sheesh! By this time, he knew our shoe sizes. He also assured us that he did this job because he loved it, not because he had to, which was good to know since by this point, if we ever did buy a place, his commission would come out to about 50 cents an hour.
A couple months later, in October, we noticed, despite ourselves, a few new places had come on the market. I caved and decided to go look one last time.
Saint Bob made three appointments. The first two places were so-so. Then I walked into condo No. 3. Until then, I had been trying to talk myself into every place I saw. This one I had to talk myself out of.
“Uh-oh. This could work,” I told DC.
The place had a killer ocean view, came fully furnished, had an impressive rental history and the seller was motivated.
And that is how we ended up standing in the kitchen telling Saint Bob to send the contract. The journey has begun.
If you’re thinking about taking the plunge into second homeownership — not that I’m recommending this foolhardy move for anyone — here’s what to consider:
• Affordability. How to afford this was a big question for us. After consulting with our financial advisors, we got some confidence that we could swing it, especially if we offset the carrying costs (including taxes, insurance, HOA dues and utilities) by offering the property as a rental.
• Convenience. Many people choose second homes out of state and spend half the year in one place and half in another. That’s fine; however, if you want a weekend getaway, choose a place that’s easy to get to. Our place is an hour’s drive.
• Renovations. Know how much time, money and energy you are willing to spend to fix a place up. Do you want a fixer or turnkey? I wanted something livable that I could cosmetically improve over time.
• Lifestyle. If you’re still working and can work remotely, look for a place that can support that. You might only need Wi-Fi and a desk. If you want family and friends to visit, get a place that has room for visitors. Can your pet come? Are you close to good restaurants? These were important factors for us.
• Your buyer appeal. In today’s second-home market, most buyers are coming in with all-cash offers, Saint Bob told us. If you have to get bank financing, you will be a less attractive buyer. If you don’t have enough available cash but have a lot of equity in your primary home, you could take out a home equity loan to make an all-cash offer. Other ways to boost your appeal is to let sellers control the closing date and to buy the place “as is.”
• Be cool. Patience is not my strong suit, but I’ve learned buyers lose leverage when they get emotional or feel pressured to buy. Keep feelings in check. Saint Bob said the fact that we took our time, knew what we wanted and could make a no-strings offer worked in our favor.
Marni Jameson is the author of seven books including the forthcoming “Rightsize Today to Create Your Best Life Tomorrow: A Motivational Guide for Those Seeking Their Ideal Home Later in Life,” due out Jan. 2, and “What to Do With Everything You Own to Leave the Legacy You Want.” You may reach her at marnijameson.com.