Real Estate Marketing & Beyond
Rather than go ahead and try to buy a home to actually live in, an increasing number of people are instead opting to purchase a vacation home first of all.
CNN.com reported that many first-time buyers are priced out of the market in their current area, especially in cities such as San Francisco and New York. Hence, they’re opting to buy a more affordable vacation property in other, cheaper areas.
“I’m seeing this more and more,” Svetlin Krastev, an investment advisor with Black Sea Gold Advisors in Kingston, N.Y., told CNN.com. “People want to have exposure to real estate, but it would take all of their assets to get a residence in the city.”
CNN gave the example of Bart Higgins, who lives in a rented four-bedroom converted warehouse in Brooklyn with his wife and twin five-year-olds, and pays $5,300 per month in recent. The home would cost between $2 million and $3 million to buy, CNN said, so rather than do that the couple decided to buy a lakeside vacation home on 33 acres of land in Kingston, N.Y. for $300,000.
“We bought our first home as a second home as a way to relieve the pressure and buy us some time,” Higgins told CNN. He said he uses Airbnb to offer short-term rentals of the property to help supplement expenses when his family isn’t staying there.
While buying a second home first might make sense for some, financial planners told CNN that in some cases it could prevent or delay people from being able to buy a main residence.
“Having a loan commitment on a second home will make it that much more difficult to buy what will be used as a first home,” said JP Geisbauer, a certified financial planner at Centerpoint Financial Management.
But other experts disagree, saying that for many people it does make sense to buy a cheaper second home first and finish paying it off. A smaller mortgage on a vacation home can be more manageable than a larger loan in the city. In addition, vacation home buyers can usually rent out their properties when not staying there in order to help pay off the mortgage.
