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Buying a “vacation” home

It’s great having a place to vacation. If you’re considering that second (vacation) home, the opportune time is when you decide that the stars are in line for you. For many years we didn’t have a vacation home, satisfied that we lived in paradise and living on Marco Island is a full time vacation.

About four years ago, we decided that we needed a place to go to get away from the day to day grind of operating three businesses: a real estate firm, a vacation rental firm and a home building operation. The bottom line was, after 60-65 hours a week, I needed a place to recharge my batteries; and a chance to lower my handicap.

In 2005 we contracted for a house that was under construction; and in the spring of 2006, we closed on the house. After the second visit, two months after closing, we decided that if we were going to get the full benefit of our new acquisition, I needed to reduce my work load; and on the drive home (home is Marco Island), the decision was made: close the building firm. I stopped taking new contracts and finished the remaining houses within 10 months. I now have reduced my work load to 35 to 40 hours a week and fit in 2 to 3 round of golf a week.

Now to the point of this column for which I’m way overpaid: if you’re considering obtaining a vacation home you need to give consideration to many options.

First you should not look to the home (or condo) as an investment. While it may become one, and in most scenarios it is the result, the focus should be to the personal benefits that you and your family will receive by owning the vacation home. While I won’t dwell on a price point (you know what you can afford better than I), you need to determine if you need some rental income to offset some of the expenses. Before we go any further, if you need a positive “cash flow” while paying a mortgage, forget it. After 40 years in the business I can’t remember anyone experiencing a positive cash flow unless they owned the property free of any liens or the mortgage was minimal.

Another subject that needs to be addressed is whether or not you need, or want, to rent your vacation home. In my family, we rent the property since it was part of a 1031 tax deferred exchange and the previous property was an investment. (If you want more on that issue, e-mail me.) If it were up to my spouse, we wouldn’t let a renter near our vacation home. She usually wins such discussions, but she let me win this one. If you need to rent the home you should not count on the amount of income your Realtor says the home generates. That is not to say the Realtor is trying to misguide you; the fact is that  vacation markets can fluctuate and today’s market is a good example. On Marco Island, rentals were significantly lower in 2009 and 2010 than in 2005, 2006 and 2007. Another factor may be the property itself. Several years ago, the demand for condos outpaced houses, today the house with a pool is in high demand.

To the most important factor: what size home and what amenities will best suite you and your family. When we decided we were going to buy a vacation home we first considered a geographic location. We first travelled to Georgia (about 60 mile east of Atlanta) and then South Carolina. We discovered that Reynolds Plantation, while a beautiful community, was too hot in the summer and South Carolina (coastal) was not much different than Marco Island. Everyone said that we should go to North Carolina, that’s where all Floridians go. We’ll we decided that we would check it out.

We set out the day before Katrina was to hit Marco Island and we had a plan. Yes, Katrina came across Alligator Alley, from Ft. Lauderdale and was headed for Marco Island. Ironically, we got in the midst of the aftermath of Katrina in North Georgia after it hit New Orleans. Our plan was to visit 4-5 locations IN THE North Georgia/ North Carolina area and then decide what would best accommodate us and our family (4 adult kids and 9 grandkids).

As it was, the first community we visited met all expectations. For those of you from the Atlanta area, the Mountains of Big Canoe is a little over an hour from downtown (don’t get caught during the commuting hours).

Now I know you’re anxiously awaiting the purpose of this column, so here goes. Whether looking for your vacation home in Marco Island, Naples, the mountains or anywhere else, your first decision should be based upon what will give you and your family the most enjoyment for the next several years. If you find what you want, don’t get an attitude when negotiating the price. We paid full price and we’re elated with the amenities and enjoyment provided to ourselves and our family.

Is it worth today what we paid for it? I honestly don’t know and I don’t care. We bought it for our family and we will continue to enjoy it whatever the value of today or tomorrow.

Marv Needles

Marv Needles is the broker/owner of ERA Flagship Real Estate which he founded in 1973. He has been a full time resident of Marco Island for over 40 years.


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