How to avoid second-home misery
HOLIDAY HOME
A second home is often mistaken as the place where the party never stops. Paul Sullivan gives three reasons to consider before making an impulsive purchase.
Everyone needs a place to live, but no one needs a second home. So the experience of choosing which vacation home to buy and where must be thoroughly enjoyed. Still, people routinely buy second homes that end up being less than they expected, or worse.
I speak from experience. My wife and I own a condominium in Naples, Florida. One of our neighbours is as bad as neighbours come. In Florida real estate parlance, he is a “condo commando” – a busybody who questions other residents on what they are doing and then routinely complains to the condo’s board about them.
Bad neighbours abound everywhere, but they seem particularly bothersome when they are in places where you go to relax. Shouldn’t everyone just be grateful to be sitting in the sun or at a fireside by ski slopes? The dynamics of second homeownership often conspire against this, says Milton F Pedraza, chief executive of the Luxury Institute, an organisation that does research on wealthy consumers. “People become slaves to their homes. They buy into the headlines and that makes them pretty miserable with their vacation homes.”
Pedraza says one common cause of second-home misery is that an owner fails to factor in how much time and money is needed to maintain a place from hundreds, if not thousands, of miles away. Ask yourself these questions:
Why do you want a second home? What are you going to use it for? Do you have any idea how much it is really going to cost?
Before you jump in, here’s a look at what you should know before buying a second home.
It’s not an investment
If the recession taught people anything, it is that the value of a home can go down. Vacation properties are certainly not immune. Beyond the ups and downs of the real estate market, Pedraza says that most buyers underestimate the maintenance costs of a second home.
“Think of the 20 to 25 suppliers who come to your house for air-conditioning, heating, landscaping, the pool man, the plumber – now you’ve got to procure those same suppliers for another property,” he said. “If you have the money and it doesn’t mean anything to you from an investment point of view and you can hire the staff, then fine.”
Deb Howard, chairwoman of the National Association of Realtors’ resort and second home committee, says that many people look at properties as a place for the family to gather and as something to leave to the children. But they still need to consider the carrying costs of the property. Howard says her first question to buyers is always what kind of lifestyle they expect to have. But her second is whether they need to rent the home to cover the costs. “Sometimes it’s not the right decision,” Howard saya. “You’re not going to use it enough. Or it’s not going to meet your financial goals.”
It’s less relaxing
What persuades people to buy a second home is usually a vacation. A second home, they think, will keep the party going with the added benefit of having a place of their own. “They only see the benefits – sitting by the pool, having a drink, driving into the driveway and leaving the Rolls Royce there,” Pedraza says. “They never figure the gate is going to be broken and they will need an electrician.”
Enthusiasm for a place can also lead to a hasty purchase. Barry Peele, of Sotheby’s International Realty in Beverly Hills tells me about a client who recently bought a waterfront home in Miami only to find out after the closing that the dock would not accommodate his yacht. Suddenly, the convenience of walking out to his boat – the original attraction – was gone.
And then there is the pressure to use the place.
“People have high expectations of their usage,” says Brian Sharples, chief executive of HomeAway, which runs several vacation rental websites. “The industry average is 30 days of use a year.”
When people realise how infrequently they are using their second homes, they often turn to websites to rent them. Sharples, who has a second home in Aspen, Colorado, says the income could defray some of the costs, including taxes and maintenance. But renting out any home can be stressful, and you may not make enough money to justify the hassle.
It’s time-consuming
Since most people do not use their second homes regularly, they cannot just walk in as if it were their primary residence. At a minimum, they have to open up the house when they arrive, make sure everything still works and close it down when they leave.
Even if money is no object, you have to find people to do the repairs. A condo may seem a better alternative but you could end up with a neighbour like we have. Pedraza suggests timeshares or private residence clubs, where everything is maintained for you. But he acknowledged that these lack the cachet of a home.
