Buying a Vacation Property
Written By: Miller and Associates Realty On: 15th September 2016 Under: Buyers, Listings, Panama City Condos, Real Estate Market, Real Estate Tips, Tips
Buying a vacation property
The prospect of owning a vacation home or rental investment property can be an alluring and exciting concept. Panama City Beach certainly is a wonderful place to spend extra time with our sugar white beaches and emerald gulf water. However, there is much more to consider when determining if second home ownership is the right fit for you and your family. When I meet with clients for the first time to discuss a potential purchase, I share the following insights so that they can truly have an understanding of what having that additional property will entail.
Understand your costs
It is important to look at your monthly and yearly cost of ownership when choosing a property. If you are considering a condo or a home within a community, you will need to know what the monthly Home Owner’s Association (HOA) fee will be and if there are any current or upcoming assessments. There may also be a new buyer fee due at closing so check the listing and ask your Realtor. Most sellers can provide a snapshot of any additional monthly expenses such as electricity and WiFi. If you intend to rent your prospective property, speak with a rental management company and request a breakdown of their fees and the local bed tax. Also, be aware that owners are often responsible for appliances such as the water heater and HVAC and also windows and doors. It is also recommended that owners purchase an additional insurance policy for their contents and liability if they are securing lending or considering renting the unit.
Know the rules
Each property can be different in this respect. Low and high rise condominium complexes typically have community guidelines that all owners and guests must comply with. Some detached single family properties and town homes also have covenants and bylaws which can dictate rental, color scheme, pet ownership and more. In the state of Florida, a buyer purchasing a non-developer (resale) condominium has a right to rescind within three days of a contract and receipt of disclosure documents. Buyers purchasing a new construction property from the developer are provided a 15 day window for rescission. Be sure to read the bylaws and any amendments in detail during this window that applies to your purchase.
Understand Lending Practices
Lending terms can vary significantly on a second home or vacation condos in comparison to a primary home loan. While some properties can qualify for as little as 10% down and a 30 year fixed rate, certain resort condominiums require special portfolio loans with more particular terms.These products are often not provided by out of state lenders as they are nonconforming loans that cannot be sold off in the secondary market to Fannie Mae. So, how can you determine if the property you interested in may need a portfolio loan? First, ask your Realtor. Real estate agents that specialize in second homes and vacation homes will be able to show you which properties may qualify in the category. Lenders look for several things but these are two major indicators:
1. Does the resort operate like a hotel with services such as onsite rental, housekeeping and check in and out operations?
2. If yes, do they allow less than a two night minimum?
If both of these are answered with a yes, a lender may qualify this property as a “Condotel” and will be able to let you know if they have loan packages that fit the criteria for these properties. The Realtors at Miller and Associates can provide you with a list of lenders who have experience with these resorts and offer competitive loan products for you to choose between.
Are there tax advantages or restrictions?
It’s important to speak with your tax professional before pursuing a property for vacation purposes. If you intend to rent the property full time, this can change the purchase into an investment and can limit the amount of days you can personally stay in the property. For more information on these specific guidelines, we recommend you visit https://www.irs.gov/taxtopics/tc415.html.
If you have additional questions about purchasing a vacation property, or any questions about the properties in Panama City Beach, contact us today. Our team of buyer’s agents are prepared to help you navigate the complexities of investment property and will be available step by step from research to closing.
Article Written by: Amanda Jermyn of Miller & Associates Realty, LLC
