Living in a coastal home or having a holiday home in a coastal area is a dream that many people have. In some cases, home prices are reduced greatly to allow people to make an investment in such areas. When you get such offers, it may be an ideal time to get your dream vacation home. There are some critical questions that you will have to ask yourself before making the decision to buy or not to buy. They include:
Why should I buy a coastal home?
The answer to the question shouldn’t be just because the house in question is not expensive. You should do so with an investment purpose in mind and also the fact that you want to use the home as a getaway. Have realistic expectations regarding how often and when you will be able to use the home. Get to know what the off season is like and determine whether it is an amazing place to retire.
What happens if the prices fall even further?
At times, there is a price plunge in the coastal homes, and even when such plunges are over, it is not easy to tell whether the prices will keep on falling or whether they will start rising. You may buy at a low price and then realize that the investment wasn’t that reasonable after a period of time. You should only buy such a home if you plan to hold on to it for a considerable period of time, say five years or more.
Financing and paying cash
Many of the second home sales are cash. When you pay this way, you have a better chance of scoring a great deal and it is what many sellers prefer. At times, when a cash bid is lower than other options, it is more preferred because other deals will usually drag. You should always talk to a mortgage lender before you start looking for a house.
In some areas, the home insurance can run four times over that of the primary home. This is because you won’t be there throughout the year and this means there is a big risk for damage or theft. Most of the coastal homes are also in areas that are prone to hurricanes and flooding. You will need a quote from the insurance company before buying the home. You also need to know more about the property taxes as they vary from one place to the next. Talk to a tax expert and get the real picture. Other fees to look out for are the homeowner association fees and condo fees and they seem to be spiking each day, especially in the areas that are distressed.
You have to determine whether the home will be affordable without any rental income. Most buyers are optimistic about how much they will get from rent. You need to play it safe and work to cover costs for the house using your own funds.