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How to Afford a Second Home or Vacation Property

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If you're a homeowner looking for ways to build wealth and invest in the future, you may want to consider buying a second home.

This is possible even if you don't have the cash on hand for these types of investments, as you can purchase a second home or vacation property with a variety of financing options. Here's a three-step plan to secure your vacation home or second home.

Set Your Financial Goals
If you're thinking about buying a second home, one of the most critical things is your finances. You need to figure out how much you can afford and what kind of financing you want. If you have a stable job or other sources of income, you may be able to get a second mortgage. And as with any loan, there are terms, regulations and requirements that you must meet.

Determine Your Budget
Whether you are buying a seasonal residential home or a vacation property that you plan to rent out, budget is important to consider. If you don't know how much you can borrow based on your salary, ask a loan professional what other factors to take into account. These may include the minimum down payment and the interest rates. An advisor can help you determine what type of loan will be best for your situation.

Find Your Preferred Loan Program
The most effective way to find the most suitable loan program—and get approved—is to work with an experienced lender. Start by figuring out how much you want to borrow and what kind of property you want. For instance, institutions like Raw Land Lenders offer a variety of loan types, including hard money loans, raw land loans and bridge loans. You may even be able to release equity from your properties, pay off demanding banks and consolidate your debts.

The Benefits of Owning a Second Home or Vacation Home
Owning a second home or vacation home can be a worthwhile investment, but you need to know all the pros and cons. Some people don't want to buy a second property because they think they won't have enough time to enjoy it, or their job doesn’t allow them to travel. However, owning a second home can be useful for many reasons. These include generating rental income, having an emergency place to stay and being able to take a vacation in your favorite state without having to pay for hotel accommodations. 

Take these factors into consideration when deciding whether a second home is right for you.

Read more on RISMedia.

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The Hidden Costs of Buying a Condo

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A condominium may appear to be an excellent investment at first glance.

Most come with numerous amenities, maintenance-free living, and a great location. However, there are hidden costs that are often talked about. Nobody likes financial surprises as they can cause excessive stress levels.

Let’s take a look at a few of the hidden condominium buying costs that must be accounted for before purchasing.

Homeowner’s Association Charges

Condo owners can avoid landscaping, roof repair, deck repair, and sometimes even window repair charges. However, their investment isn’t entirely maintenance-free. Condos have annual, monthly, or quarterly charges in the form of homeowner association fees that cover typical building maintenance.

These fees tend to increase at per with the property value and as the property ages and requires more maintenance.

Understanding property association fee amounts, frequency of payment, and rules governing increases are critical in ensuring they don’t overeat into your pocketbook or wallet.

When buying a condo, carefully look over the financial statement. Ensure there is economic stability and plenty of money in the reserve fund.

Special Assessments Are Unplanned Expenses

Property association charges generally cover typical costs. However, unplanned expenses are inevitable and must be passed over to condominium owners when they occur. These are known as special assessments and are typically significant expenses.

They can be a tough pill to swallow, especially for new owners who have just purchased and weren’t aware of them.

A typical example would be expenses to rebuild a balcony that has been deemed unsafe. If all balconies must be redone, the cost is generally shared among all condo owners. Another example is the roof on the clubhouse needing replacement. These costs can add up quickly.

Most unplanned expenses aren’t optional and need to be met by every property owner. The importance of knowing a condominium’s prior unexpected expenses history can’t, therefore, be overlooked.

It also helps to know the protocol for unplanned expenses. There are many questions to be asked when buying a condo and anything related to fees is crucial.

Additional Insurance

While the property must have insurance, condominiums have unique insurance needs. Even if you take a mortgage to finance your purchase which typically comes with insurance, you should consider severe but commonly overlooked risks.

For instance, condominiums spread across the beach to offer expansive ocean views come with additional risks. Proximity to the beach is a great marketing tool. However, standard homeowner insurance policies don’t cover damage linked to hurricanes, flooding, and wind.

The location of many oceanfront condos makes them susceptible to flooding. Most are located in or near flood zones demanding additional insurance protection. It’s therefore up to a condominium owner to take additional coverage for their unit.

To avoid hidden insurance costs, it’s advisable to see what the current insurance protects before buying the condo. The exclusions at this stage can be used to negotiate for a better buying price.

Alternatively, you’ll be able to see if the additional insurance cost makes sense. Insurance agents can assess current coverage to identify further needs.

Consulting an insurance agent ensures you uncover hidden insurance costs that help you make a more informed condo purchasing decision.

Final Thoughts

Owning a condo is a great way to have a vacation property or downsize after retiring without compromising on most things. However, the above information highlights the hidden costs of owning a condo that is commonly overlooked. Acknowledging these costs of buying a condo is critical to ensure your condominium investment makes sense in the long term.

Before making that final purchase decision, talk to the Realtor, insurance agent, loan provider, and property association manager. These professionals should be part of the final process in determining if purchasing a condo is right for you.

Keep reading on RISMedia.

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Coming Soon To A Backyard Near You

 
 

Curious about those small looking houses popping up in people's backyards? Additional Dwelling Units are on the rise in Bend for plenty of reasons.

Dense housing is on the rise in Central Oregon. Multi-story apartments have started to appear in the skyline and condos and duplexes have seen an increase in construction, but one option where locals are seeing a particular boom is the construction of accessory dwelling units, commonly known as ADUs. Since 2001, 702 ADU applications have been approved in the city, with 516 approvals since 2016. This shows an exponential growth trend that is likely to continue as issues of housing affordability and desire to live closer to city amenities increases. The American Planning Association defines ADUs as "a smaller, independent residential dwelling unit located on the same lot as a stand-alone (i.e., detached) single-family home." They differ from tiny homes in size, and function. The average ADU is around 400 to 800 square feet, while tiny homes are generally less than 300 square feet and often include some aspects of portability.

Although sometimes controversial, Larry Wright of Tekneek Architecture believes they are a more socially accepted aspect of dense housing. "Unlike apartments and [other] high density housing, ADUs have been the most socially acceptable way to add density 'in my backyard' as opposed to the NIMBY's (not in my back yard)," Wright told the Source.

Although construction of these units is a relatively recent phenomena garnering attention, ADUs have been around for a long time, and have obtained different names, such as granny flats, coach houses and the mother-in-law suite. Given these names, there has been a historic stereotype associated with who builds and dwells in these units, but in Central Oregon, locals have diverse reasoning to live in ADUs. Reasons might include a desire to live a minimalist lifestyle or finding an affordable space, or being able to harness some extra income from a single-family property.

The transition phase

Moving to Bend as a recent college graduate isn't easy. With high student loans and an average rent of around $1,800 for an 800-square-foot space, according to the rental database RentCafe, there is a big risk moving to the area when trying to establish financial independence. Nik Eriksson is a recent college graduate who found that the affordability aspect of living in an ADU brought a sense of financial freedom as he transitioned from academia into the full-time working world.

"I was able to add a little break where I could figure out what's going on and get some direction." Eriksson says. The affordable aspects of a smaller space made it possible for Eriksson to work full time and actually save some money in the process. This is important in a growing city where the average age of residents is 38, and trending upward. Eriksson also found that although not intentional he appreciates some of the more minimal aspects of living in this space.

"I've come to enjoy more minimalist living. It only takes four minutes to clean the entire place," he said.  There are some hurdles to minimizing space, though. In lieu of a kitchen, Eriksson uses a single sectioned hot plate for daily cooking. "I've never had to microwave rice before moving here," he joked. In spite of these trade-offs though, living in the unit has allowed Eriksson to gain a foothold in a community that's becoming increasingly more expensive.

The Architect's perspective

Wright, in his experience as an architect, lists the people who are living in ADUs: "Number one is a market renter, two is relative or friend and three is the landowner themselves." For homeowners, ADUs can expand financial opportunities and present some flexibility as aspects of their lives change.

"The vast majority of local homeowners that do not have children living with them are interested in downsizing, and some are choosing to live in their ADU and rent out the big house for a better cash flow," Wright said. Homeowners and those from more established demographics may see ADUs as a positive economic asset that complements downsizing needs.

As far as the reasons for building one, "Additional income is the runaway winner," Wright said. "A place for ailing parents or relatives to live close by is second and third is designing an ADU into a new house build to help justify the high purchase cost by being able to offset some of the mortgage payment with rent from the ADU." Wright believes that not only do ADUs help folks improve their financial situations, but they can also provide benefits for the community as a whole.

"It really helps society with the rising cost of housing. They provide lower cost places to live, provide ancillary income to the average homeowner and allow young family members a transitional place to live before they can afford to rent or buy their own place. With the cost of real estate so high now, an ADU can also help buyers offset the costs on a property they may not otherwise be able to afford," Wright says.

With the state recently eliminating single-family zoning in favor of building allowing more duplexes and multi-family units in areas formerly only zoned for single homes, denser housing is a growing reality for all of Oregon. While there are diversifying reasons for seeking alternatives to traditional single-family housing, a lot seems to stem from people in transition periods of their lives. "The demographic that finds ADUs attractive are young people that likely have not yet started a family, single parents (usually due to lower rental rates), and seniors that are simplifying their lives and no longer need a lot of space," Wright explained. With the multitude of reasons, expect ADU interest and construction to remain on the rise.

Read on.

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Just Listed: Like New Home in Southwest Bend

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This Turnkey home is ready for its next owner!

3 beds, 2 baths, and 1 level. This nearly brand new home offers an open concept with vaulted ceilings and tons of windows for natural light. Inside you’ll find new window blinds, new interior paint, plus matching stainless steel appliances and a gas fireplace. The primary bedroom is separated from the other rooms, with large dual closets. Outside boasts a covered porch, a large trex deck, plus a fully fenced backyard oasis that is fully landscaped with sprinklers. This home is located in SW Bend in a friendly neighborhood with no HOA, small RV parking, and has easy access to the Old Mill, Hwy 97, Brookswood plaza, and schools. Schedule your tour today, this home won’t last long!

Listed by Shaleana Stout for West + Main Homes. Please contact Shaleana for current pricing + availability.

 
 
 

Have questions?
West + Main Homes
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hello@westandmainoregon.com

Presented by:
Shaleana Stout
(541) 647-3275
shaleana@bendrelo.com

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Just Listed: Newer Home on Wooded Acre Lot in River Pine Estates

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Newer home built in 2020 that sits back in a wooded 1 acre lot with many Ponderosa trees.

1 bedroom, 1.5 bath, with 672 sq ft. with storage space above bedroom and bathroom. Vaulted blue and buggy ceilings with recessed lighting, beadboard panels and laminate flooring throughout the home. Stainless steel appliances, with gas range. PTAC heating and a/c unit with a ventless propane wall heater for back up. Covered vaulted ceiling front and back decks with hot tub. Fenced back yard. 10x20 storage building, with a covered stall area. New septic and well.

Listed by Tisha Anderson for West + Main Homes. Please contact Tisha for current pricing + availability.

 
 
 

Have questions?
West + Main Homes
westandmain.co
hello@westandmainoregon.com

Presented by:
Tisha Anderson
(541) 420-1361
tisha@westandmainoregon.com

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