Vacation properties and second homes are wonderful real estate properties to own. And the real estate salesperson who sells these knows the importance of vacation property marketing.
If they are actually houses, they will be advertised as houses. But if they have some other special appeal, like they are located in Palm Beach, Florida, for example, they should also be found in vacationing magazines. And there is also the internet, of course, to market your vacation property globally.
A very specific audience is geared toward looking into these flyers and magazines. They are perhaps snowbirds seeking a place to live during the winter months, or they love a specific area and want to have a place to visit every summer.
Whether your clients enjoy a cute, little cottage by the beach, or a bungalow among others and with a public pool, there is a place to please them all. And they will search ads in local papers, the internet, and magazines to find just the perfect property for them.
Condos and timeshares may also appeal to the vacation property seeker. Some do not want the hassles of a house with a yard, and so on. And if someone intends to visit the same resort area during the same time of every year, of course a timeshare would be perfect for them.
Vacation properties should not only be marketed in the areas in which they are located, but in areas that are far from them, and in fact, opposite. For example, you might market a property in North Carolina or Florida to people living in the northern states where it is chilly even in June. There will certainly be an interest in them, and if they see the same ad during the springtime months, they may just give you a call and take a ride to see some summer properties.
For more info and questions in regards to Vacation Property Marketing please visit the Onlinevpm Group at www.onlinevpm.com
Second-home market offers first-rate deals for boomers
By Eugene L. Meyer
U.S. NEWS & WORLD REPORT
The housing market reflects a paradox of the current economy: Though some baby boomers are struggling to prevent their primary residences from sliding into foreclosure, others are realizing their dream of purchasing a vacation getaway
Many people “still have a lot of money that sits on the sidelines waiting,” said Michael Saunders, a Sarasota, Fla., broker active in the second-home market. “I think the wait is over for them. Anywhere you look, you are going to find prices we haven’t seen since 2001,” largely because of foreclosures and short sales of homes for less than what’s owed on them.
However, boomers without disposable income should steer clear of the second-home market, even if they believe they can get financing, advised Christine Karpinski, author of “How to Rent Vacation Properties by Owner.”
“Don’t get yourself caught up in the mess millions of Americans are in right now,” she cautioned. “Don’t overleverage. If you are already retired or close to retirement, that’s not a risk I would take.”
Conversely, for the fortunate who are flush with cash, have high credit scores and possess sufficient disposable income to make down payments of 20 percent or 30 percent, now may be the time to jump into the market. Sharply reduced prices and the lowest interest rates in decades have combined to create a buyer’s market. Moreover, with the stock market in the doldrums, some boomers are finding that a second home can be a worthwhile long-term investment.
Marleen and Scott Karns, who live near Harrisburg, Pa., cashed
in stock inDecember to buy a condo with relatives on St. Croix, in the U.S. Virgin Islands, for $310,000. This was well below the original asking price of $390,000. “It’s our ‘CD’ in St. Croix,” Marleen said. After incurring some signifl-
Vacation property in warmer climates entices many snowbirds.
cant startup costs, including interior decorating and the purchase of a flat-screen TV the Karnses now rent out the property when they are not using it themselves as a vacation home.
“We feel like we’ve kind of landed in our dream come true,” Marleen said.
What is unclear is how many couples have the ability to capitalize on the market as the Karnses have. In 2009, the typical second homebuyer was 46 years old with a median household income of $87,500 (down from $99,100 in 2007), according to surveys by the National Association of Realtors. And while income has gone down, second-home prices rose 12.7 percent in 2009, the NAR notes. Though these factors have closed the market for some, the simultaneous increased demand for rentals of vacation and weekend properties has made these
purchases feasible for others.
If you are a prospective buyer, consider three key issues:
1. Can the property generate enough rental income to cover carrying costs (mortgage plus maintenance, insurance, utilities and property taxes)?
2. Will the rates you charge, especially for the most expensive properties, attract a pool of renters that is both sufficiently large and sustainable (particularly during economic downturns)?
3. If you intend to use the second home more than you will rent it, do you have the means to carry two mortgages and to pay
Some boomers who bought second homes at their peak price now find themselves alarmingly underwater on their mortgages, which means they owe more than the property is worth. For these owners, Karpinski recommends renting to cover expenses and waiting out the market to give the properties a chance to appreciate.
New buyers, however, “can purchase a vacation home and have it break even from rental revenue… because the prices of properties are lower,” she said. “If in 2005 you bought for $500,000, and the rental market was $1,500 a week, you’d be hard-pressed to break even.” But with a property today at $300,000, “you can indeed break even. The rental rates have not gone down.”
Saunders said many sophisticated boomers are searching not for home equity but for “lifestyle equity” They care more about their environment than rising property values. Saunders promotes the Sarasota area as the “Culture Coast,” offering opera, theater and other amenities.
That “absolutely compelling lifestyle” is what attracted Vic and Sandy Motto. The couple’s primary residence is in Califor-
nia’s Napa Valley, which Vic said is suffering from a “very depressed” real estate market. In contrast, Sarasota offers “good values” and “mortgage interest rates which are at an all-time low.”
The Mottos ? he’s 71, she’s 62 ?paid $1,085 million in April for a 2005 contemporary with a 47foot swimming pool that was listed at $1.23 million. When prices plunged during the recent downturn, “all the bells went off,” explained Vic, a wine industry investment banker. “We said, ‘This is it. Let’s jump on a plane and do something about it.’ ”
In Arizona, second homes are available at fire-sale prices, hav¬
ing plummeted as much as 70 percent from their highs in some areas. Foreclosures and short sales have driven prices down, said Phoenix-area agent Debora Nichols. Most of her clients are out-of-staters and Canadians, who are able to obtain lines of credit.
For many prospective secondhome owners, “the difficult part is financing,” said Tom Kelly, co-author of “How a Second Home Can Be Your Best Investment.” “Lenders are even tougher with second homes than with primary residences.”
In some instances when a buyer cannot obtain traditional financing, Kelly said, the seller
may be willing to hold the mortgage, acting as a banker. “Go in there and ask what’s possible,” he advised.
Saunders still sees real estate as a good long-term investment. Those who dream of a second home should consider this, Saunders said: “If you look at return on investment from 2000 to 2009, even though real estate has lost a lot of that [price] run-up we saw, it was still a better investment than the Dow, Standard & Poor’s and Nasdaq” stock indexes.
Distributed by Tribune Media Services
TORRY BRUNO/TRIBUNE NEWSPAPERS PHOTO
A vacation property expert says that many sophisticated baby boomers are searching not for home equity but for “lifestyle equity,” caring more about their environment than rising property values.
On Tuesday evening, Sept. 21, the Senate passed a bill to extend the National Flood Insurance Program (NFIP) through September 30, 2011. The House is expected to take up the bill on Thursday, September 23, with passage likely. The program was set to expire on September 30, 2010.
This is great news for a couple of reasons: first, because it keeps the program operating for at least a year. For the past year Congress has allowed the program to expire twice. An expired NFIP throws real estate markets into turmoil, especially water-dependent Resort communities. Without an NFIP, no new flood insurance policies or renewals can be written, which places property in a floodplain (such as coastal and lakeshore resorts) at a risk of flooding without insurance. Private flood insurance is expensive and difficult to obtain. Having flood insurance for at least a year eliminates one more obstacle to a resurgent housing market.
Second, having the program operating for a year gives Congress more time to reform the program and place it on a more viable financial and actuarial foundation. House-passed legislation earlier this year would have made some reforms to the program; unfortunately the Senate did not have time to discuss the legislation. NAR will continue to push for reasonable reforms, such as more accurate maps and higher coverage limits, while also making sure affordability is taken into account when premium rates are established.
The Senate held a hearing on reforming the NFIP on Sept. 22, at which NAR was ably represented by Nick D’Ambrosia, a Realtor from Maryland – witnesses discussed a variety of NFIP reform options, and I would encourage everyone to spend a few minutes viewing the attached hearing to hear all of the complexities of NFIP reform.
Senior Policy Representative and
Government Affairs Liaison to the Resort and 2nd Home Committee