Endless Vacation

This summer, thousands of people will fall in love, and some will be tempted to make a serious commitment: buying a vacation home.

“People come, maybe rent a home, and start to really love the lifestyle,” explains Melinda Chapin, a Cape Cod, Mass., real estate agent with Sotheby’s International Realty.

Passion for a place is what pushes people to buy a vacation home, adds Christine Karpinski, author of “How To Rent Vacation Properties By Owner” (Kinney Pollack Press, 2004) and a website of the same name.

And, passion is essential to successful second home ownership, Karpinski says. “You should buy with the intention of enjoying the home, and maybe renting when not using it,” she says. “You shouldn’t think, ‘Well, I’ll just flip this later if I don’t like it.’”

It’s a mistake to consider a second home as an investment, like a stock or bond, says Michael Sklarz, owner of Collateral Analytics, a Honolulu firm that runs the website Homepricetrends.com. Since the battered housing market is still struggling to recover, anyone buying a home – a primary residence or a second home – should expect to own for at least a few years, to avoid selling at a loss.

It’s especially important to be happy with a second home for an extended period, Sklarz says, because boom and bust trends are more pronounced in vacation locales.

Here, some questions to ponder if you’re thinking of turning this passion into something more permanent:

What’s the easy life like?

When broker Jerry Grodesky shows clients vacation homes, the search often takes unusual turns, as clients determine if the location is perfect for them. “We’ve sat out in a field at night to see how bright the stars are, or how bad the bugs are,” says Grodesky, of Farm and Lake Real Estate in Buckley, Ill.

Renting for several weeks, perhaps over a few seasons, can sharpen the view of the vacation lifestyle. When renting, ask yourself how much you’d enjoy traveling to the location frequently, and observe as much as possible about the lifestyle.

Sometimes, unpleasant surprises can arise “no matter how much research you do,” warns Gail Lyons, an agent with Boulder (Colo.) Real Estate Services. She had a condo in Tucson, Ariz., but sold it “because the owner above us had a big dog we could hear at night,” a dealbreaker that would have been difficult to predict.

Did you count all costs?

Mortgage lenders require at least a 20 percent down payment for a vacation home, and the mortgage, property taxes and monthly insurance bill, along with a borrower’s other recurring monthly debts, shouldn’t exceed 36 percent of pre-tax monthly income, says Megan Greuling, spokesperson for LendingTree.com.

Those rules are stricter than a mortgage on a primary residence. The tight standards make sense, experts say, because unexpected costs (like assessments to remedy beach erosion or big grocery bills from feeding guests) are bound to creep up.

Can you mix business with pleasure?

If buyers want to rent the home when they’re not using it, they should consider that at the outset. “Let’s say you like two different properties. Take the one that would appeal more to renters,” Karpinski suggests.

Lyons, who holds a Resort and Second Home Property Specialist credential from the National Association of Realtors, says that an experienced agent should be able to help buyers discern the rental demand for properties. Ideally, the real estate agent will be happy to answer questions about maintenance help or other issues, even after the purchase is completed, Lyons says.

Indeed, it’s impossible to anticipate exactly what life will be like as a vacation-home owner or landlord. That’s why buyers would do well to look inward, deciding whether their passion for the place will carry through the years.