“Should I buy a weekend place *outside* the city?” is a question I get all the time.
Many couples (and singletons!) find that buying in Manhattan or Brooklyn is financially out of reach, but a place in the Catskills, the Jersey Shore, or the North Fork is comparatively affordable.
It happens to be a topic I can talk about all day, as my friends all know I love “my” Montauk.
Here are four questions to ask yourself before you pull the trigger.
1. What’s Your Goal?
Are you planning to use and enjoy it on the weekends, or are you looking at it as a real estate investment. Or a little of both?
You will probably be looking for different things in a home you plan to occupy vs. one your plan to rent. For example, train access may be more important for a rental property. And a fixer-upper may not be a great idea if you plan to rent it at a profit quickly.
Keep in mind that different areas have different rental restrictions. Even if you don’t belong to a Homeowner’s Association (HOA) or co-op, your town could have rental registry requirements. This is definitely something to be aware of if there is a chance you will want to rent the house for income. (Which by the way is taxable – consult your tax advisor!)
2. Can You Afford a Weekend Home?
You definitely get more for your money outside the city, but need to consider the upfront and the ongoing expenses.
Your upfront costs include the down payment (the big one), as well as closing costs and fees, and possibly renovations. Please plan to put down at least 20%.
Your mortgage is usually the biggest ongoing expense, but don’t forget local real estate taxes, homeowner’s insurance, utilities (which could include things you don’t pay for separately in the city, like water and heating oil), HOA fees, garbage pickup, internet, etc. And don’t forget lawn mowing and snow removal!
3. Will You Use It?
How often do you think you’ll go? How will you get there? Could you take a train or do you have to drive? Do you have a car or will you be renting one for weekends?
Growing up in a small town, we never had a “weekend home”, but once I lived in New York City for a while, I started to realize that getting OUT of the city on a regular basis is important for my sanity (and everyone around me).
Before buying our place, I knew we would use it. We had already done a summer share house rental for years. We knew we loved spending our weekends there, and dreamed of having a place to putter around the house and in the garden. It also helped that my husband and I are both pretty handy and actually like doing home improvement projects around the house (and of course gardening)!
We spend a lot of time at our place, but I must admit that it gets harder when kids reach school age. You can’t take off and work from home for a few days because your kid needs to be at school. And if your kid is into sports on the weekends, that will affect your plans as well.
4. What if Circumstances Change?
What if you get transferred for work? Or start a family? Or lose your job? Would you/could still use the house?
What if you needed to sell? Is the local housing market pretty liquid, or do you notice the same houses on the market year after year? (That happens a lot in second home markets!)
Could you rent it easily and for how much? Take a look at local listings on AirBnb, VBRO, etc. See what the going rental rate is in the area and compare to your projected mortgage. Could the house potentially pay for itself? Sweet!
How to Get Started
You’ve already been stalking places online, haven’t you?
That’s a great place to get started, but you’ll need to actually visit places to move forward on your dream. Open house this weekend, anyone?
Good luck! I know I have no regrets and wish you the same!
- Buying a Second Home First
- Why I Bought My Second Home Before My First Home: Money, Freedom, Fireflies
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