Determine resort home subdivision values by answering these three questions, and you’ll be able to purchase the perfect vacation getaway while still ensuring a good investment. No category of the residential real estate market is more volatile. Few are as prone to misrepresentation. It’s important for buyers and sellers to obtain the most accurate figures available.
What’s going on in the neighborhood?
Sure, we all love Walt Disney World, and many of us would jump at the chance to live close enough to visit every day. The problem is knowing how much to pay for a home near the parks, especially a property you’ll only use while on vacation.
It’s not always easy to compare apples to apples in resort subdivisions. Investors do well to break prices down to an average cost per square foot. Properties listed above that rate should have special features, such as an ideal location or outstanding amenities. Likewise, properties listed below the norm give you a heads up to disadvantages which might not stand out on their own.
Timing has a major impact on the value of resort homes in popular areas. During the busiest seasons, it’s easy to see how you can visit your favorite destinations while saving money. Real estate agents take advantage of the year’s highest rental rates to impress potential vacation homeowners with how much they can earn with their second home throughout the year. The problem, of course, boils down to the discounted rates found at other times of the year.
Not just that, but demand for destinations changes on a yearly basis. Did you know New Orleans turns 300 in 2018? Hotels were charging premium rates for Mardi Gras this year. Swarthy sellers will promote those numbers when they’re looking to sell, and it’s up to the buyer to do their due diligence.
How much will your vacation home cost to maintain?
Vacation homes come with responsibilities. Taxes, utilities, insurance and maintenance are familiar enough, but other increased costs might surprise you. Not only are costs usually higher in sought-after locales, but insurance providers and mortgage lenders take extra risks for homes that are vacant part of the year. They make up for that by higher premiums and interest rates. These homes often have pools and other features that mean big maintenance bills and the potential for expensive repairs.
Many resort subdivisions have homeowners associations. These groups provide basic services to ensure the area stays safe and inviting, but those services come with monthly costs.
For those who intend to recoup a portion of their costs by renting out their vacation homes, there will be additional fees for property management, professional cleaning between guest stays and other services. For those who won’t, improved security features – whether hiring a security company for regular monitoring or installing a high-tech system to keep intruders out – could cost a pretty penny.
Homeowners must consider and leverage these costs against potential appreciation of the property’s value. But that’s not all. You’ll also want to compare what that money could do when used for a different type of investment.
What will happen when you file your taxes?
One of the perks of home ownership today is the tax break you get for paying a mortgage. You get breaks on the sale of your primary residence too, but using that home as collateral to buy a resort home in a subdivision could cost you those benefits. Speak with your tax professional about the impact on your yearly tax obligation before you start the ball rolling.
Additionally, unlike a primary residence, if you sell a vacation home, the entire purchase price is taxable. This is something to consider when figuring potential investment payoffs. The more things considered, the promise of resort properties returning enough to provide for your retirement begins to droop.
Vacations can provide you with a euphoric sense of freedom, and real estate agents use that to their advantage while shopping the potential of vacation homes. You’ll save so much over a lifetime. You’ll earn so much in rent. The property will make you a fortune over the years. You stand to lose a lot if you take them at their word. Work with a valuation pro to ensure you’re spending the right amount for your investment to pay off.
Still have questions? Contact our team at Global Valuation when you need help determining resort home subdivision values. We have the experience, training and skills to provide you with accurate figures every time.