Increased home availability, lower prices, greatly reduced interest rates, and probable “end of the season” bargains make this an excellent time for you to explore adding a second home to your real estate holdings. Add to that the opportunities to make a safe long-term investment, defray mortgage costs by offering short-term rentals, and ensure a yearly getaway spot that’s sure to please, and you have a long list of reasons to explore the possibility of owning and enjoying a vacation home.

As with any large purchase or major decision, there are, of course, many factors which must be considered. Items to think about include the following:

            1. Expenses: Be aware that, unlike the mortgage on your Gainesville FL real estate, you will need at least a 15% down payment. Know, too, that in addition to your regular monthly mortgage cost, you will also have to factor in expenses for insurance (perhaps even required flood insurance), furniture, utilities, condo, club, or community fees, taxes, property management fees, travel costs, and maintenance expenses.

            2. Frequency of use: If you will be occupying the property only for a few weeks each year, is it really worth it to buy rather than rent? Is this the place in which you’ll want to vacation every year?

            3. Tax ramifications: owning a second property, especially if you gain rental income from it, will affect your tax situation in some way. Consult your accountant for advise to avoid surprises in April.

            4. Location: Have you spent much time in the area you have chosen? Is it near enough to your home to make traveling back and forth reasonable in terms of time and expense? Be sure to visit the community often and at different times of the year before deciding that this is the place for you. Talk to neighbors, consider your privacy needs, look for a level lot and landscaping, assess your need for a view and/or amenities. Ask the realtor who helped you find your Gainesville FL real estate to recommend an agent in the area you are considering and take advantage of his/her knowledge and services.

            5. Retirement plans: If you are planning to retire to this home in the future, be aware that your interests and physical abilities may change in the interim. Think about the home‘s layout and accessibility (especially stairs), weather-related restrictions and ramifications, and your physical condition and limitations at that time (arthritis, anyone?). Be realistic. Will waterskiing, hiking, or snowboarding still be part of your lifestyle?

            6. Renting the property: If you plan on renting your house when you’re not using it, who will clean it between guests? Just as you must do preventive maintenance on your Gainesville FL real estate, your vacation property will require the same care. Will you hire a property management service? Check with your tax advisor about how much of the upkeep and management expenses are deductible.

If, after due consideration and realistic planning, you just know a vacation home is for you, then go for it! Be ready to purchase the perfect vacation home when you find it –and enjoy it to the fullest!

Linda Luetjen assists buyers looking for Gainesville FL real estate for sale and aggressively markets Gainesville FL homes for sale.

She understands the purchase of any Gainesville FL home represents not only one of the largest and most significant investment a person can make, but also a decision that affects the entire life of a family. It should be handled with all the care and attention such a significant transaction deserves. You may rest assured that Linda never forgets this. Her reputation depends on your satisfaction.

For more information about buying or selling your Gainesville FL home, please call Linda toll free at 888-424-8841 or via email with our convenient contact form.

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Choosing a location

Do you want to be in the middle of all the activity, or enjoy the peace and quiet of a secluded location?  Is a condo at the mountain your cup of tea or a farmhouse tucked away in the woods? Whichever environment you prefer, here are some things you should consider:

• Popularity.  A house in a hot vacation market will usually cost more than a place off the beaten path.  At the same time, continued popularity may help you profit from appreciation.
• Proximity to your home.  If you plan to visit regularly, look for a place that’s easy to get to. 
• Rental possibilities.  If you’re hoping to offset some costs by renting the home for part of the year, find out about seasonal demand for rentals in the area.

Maintaining your getaway

Regular upkeep is more difficult with a vacation home than with your primary residence, but no less important.  The value of the home, both as an investment and as a place you enjoy visiting, depends on good maintenance. 

If your Gainesville home is not far from your vacation home, you may want to make weekly visits to mow the lawn, water the garden, clean the gutters or shovel snow.  If doing it yourself is impractical, consider hiring a vacation property management company to provide maintenance services during the times when you’re not using the home. 

Visit GatorHomes.com to learn more about buying a vacation home or give me a call for more personal service.

Renting does have its pros and cons. Some owners don’t like the idea of ‘strangers’ in their home. Others don’t want the hassle of being a landlord, especially a long distance landlord. And then there is the decision to give up the prime vacation season for rental income. The flip side is renting your vacation home provides a stream of easy money.

EscapeHomes.com offers advice and tips when considering a Gainesville vacation home purchase and deciding whether renting out that home is right for you:

Before You Buy
If you already know you will rent your vacation home, consider these questions as you look at properties:

•  Is there a rental market in the area?
•  What is the average rent that your neighbors receive?
•  If you are looking in a development, are there any by-laws which restrict your rental capabilities?
•  Is this a seasonal area or year-round location?

The answers to these questions will help you select a more lucrative property for your vacation home.

Rental Seasons
How do you decide when to rent your property and when to use it yourself? Since you are buying primarily for your own fun and enjoyment, you shouldn’t sacrifice this. If the home is in a one-season area, for example, summers at the Maine coast, then giving up that time of year for rental income defeats the purpose of having the home. In this case, you might look for a long-term (9-month) renter for the off-season, among the local population, while you use it in the summer. On the other hand, if you buy a winter ski condo or chalet, it is still highly rentable in the summer time for the mountaineering types. If you buy a property for weekend use, perhaps there are local people who need a Monday-Friday escape option. In short, if you balance your own needs with the market demands, you get both fun and money.

Practical Considerations
For successful renting, first find out the going rental market rate. Second, determine if you want to market it yourself, or use a rental agent. Self-marketing takes time, but often generates more qualified renters as you are not competing with all the other properties of an agent. Third, be sure to arrange for a property manager. This is different from a rental agency. The manager will take 10 to 20 percent of the rent, and free you up from cleaning, being on call for maintenance (especially important if you live far away), and dealing with the daily needs of the renters.

Make it Personal
By far, the most important factor in success is your personal investment in the process. This means your personal contact with your renters. From a simple welcome note and local maps to a thank-you note and on-going contact, your relationship creates a repeat flow of guests who not only love your second home as much as you do but also pay for the privilege of using it. What could be better?

If you are considering buying a Gainesville vacation home, give us a call, 352-332-8841, we are glad to provide you with the information you need to make a good buying and renting decision.

Think you want to rent out your Gainesville vacation home, but don’t want to handle the day-to-day details yourself, we can recommend a Gainesville Property Manager.

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You have probably heard, last week President signed into law the Housing Rescue and Foreclosure Prevention Act. This is the most comprehensive housing bill to be enacted in over a decade. The bill is designed to help more buyers of Gainesville real estate realize their dreams, as well as, boast the struggling housing and mortgage markets.

One of the biggest benefits, and probably one of the most talked about provisions in this legislation, is the $7,500 tax credit to first time home buyers. Tax breaks are all well and good, but they have to be paid for somehow. While first time home buyers are getting a break, second home sellers will be paying for the $15.1 million dollars in tax cuts.

Up until the new legislation went into effect last week, homeowners could exclude up to $250,000 taxable profit on the sale of their home if they’re single taxpayers and $500,000 if married filing joint returns. The catch being, they had to live the in house as their primary residence for two of the five years before it is sold.

Many second home owners took advantage of this by moving into a property that was once a rental or vacation home, live there for two years prior to selling and benefiting from the tax-free profit.

With the new legislation, owners selling on or after January 1, 2009 will have to factor out the period when the property was still a rental or vacation home and pay taxes on that portion of the profit.

Here’s an example courtesy of BankRate.com:

Jim and Joan are in their 50s and next January buy a vacation home for $200,000. Ten years later, they retire, sell their old principal residence and make the vacation home their new principal residence. Fifteen years after that, Jim and Joan, now in their 80s, move to an assisted-living community and sell the vacation-turned-primary-residence for $700,000. That nets them a gain of $500,000.

Under pre-housing bill statute, Jim and Joan wouldn’t face any tax on the entire $500,000 gain.

The new law, however, means that Jim and Joan can exclude only 15/25, or 60 percent, of the gain. That would give them $300,000 of nontaxable property sale profit and $200,000 upon which they would owe long-term gain taxes.

As you can see, the new legislation significantly affects second home owners and their retirement strategies. The second home market has remained strong in the last few years, but this may change dramatically in the near future….something congress may not have intended.

If you own Gainesville real estate and are in the middle of converting your second home to your main residence, you could be out of luck. If you don’t have enough time left in 2008 to meet the two year lived-in rule and sell the property, when you do sell next year, you will pay.

If you need to sell your Gainesville home before January 1, 2009, give us a call at 352-332-8841. We will help you get the highest price for your Gainesville real estate before the end of the year!

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