Ways of financing a second home (Snowbirding)

[Aiming_4_55]

Quote:

Originally Posted by Ronstar Insurance is less expensive if you buy a condo - only pay insurance on the contents. Building insurance is covered by the HOA. At least in my case.

The insurance coverage is built into the HOA dues for exterior, structural, liability, etc. The owner should consider personal policy for coverage on contents, certain liability, etc.

If you add both, it's not always less expensive if you compare square footage, location, etc. YMMV, no free lunch.

[Ronstar]

Quote:

Originally Posted by Aiming_4_55 The insurance coverage is built into the HOA dues for exterior, structural, liability, etc. The owner should consider personal policy for coverage on contents, certain liability, etc. If you add both, it's not always less expensive if you compare square footage, location, etc. YMMV, no free lunch.

True, and some insurers have a minimum dollar amount of contents that they will insure.

[brucethebroker]

If you find a vacation home you like, why not mortgage it now, and lock in today's low interest rates? While you are working is an easy time to get a 2nd home financed, if you have good credit. We did that years ago, and it was no problem.

[MRG]

OP.

In regard to a HELOC.
We used ours as a source of funds to secure a second home. We bought and paid for the second, now first, home. Ours was transient, when our old home sold we paid the HELOC off.

The reason to get any line of credit while you're still working is about debt to income ratio(to my knowledge). If I'd of established ours while still w*rking our LOC would have been double. IIRC we could have established a LOC for 85% of our first homes appraisal. Our limit was based on our intentionally limited income. It worked for us, I'm sure there's other ways.

[bigcmagor]

The annual costs of ownership of our winter home in Florida is $12,000, capital improvements aside. This is what friends pay to rent a similar home for three months in the winter. Zillow claims our home appreciated over 20% in the last thirty days. I can board an airline with my computer bag alone because every thing I need is already there. Count me as a happy second home owner.

[timemoveson]

Quote:

Originally Posted by bigcmagor The annual costs of ownership of our winter home in Florida is $12,000, capital improvements aside. This is what friends pay to rent a similar home for three months in the winter. Zillow claims our home appreciated over 20% in the last thirty days. I can board an airline with my computer bag alone because every thing I need is already there. Count me as a happy second home owner.

With due respect, I would point out that:

- you can't leave the capital improvement costs and hassles "aside" in thinking about the numbers;
- your property may or may not appreciate in value and Florida quite obviously has had it's turn on both sides of that coin;
- your capital is tied up in that property and consuming your wealth that could be deployed elsewhere.

I have fairly extensive personal and investment real estate experience now, and currently own two expensive fully paid for personal use properties which we enjoy a lot. We have perhaps profited above inflation due to our location in and near a major world capital city after all costs have been properly considered. However, we have also concluded that overall, over time, returns on personal use real estate basically track to the long term inflation rate. This means you have to really want it, and that is perfectly ok if you can afford it long term; it is not, IMO, an economic advantage to own over renting. It really is a wash when all costs and missed opportunities are considered properly.

[Floridatennisplayer]

It's an interesting game for sure. Renting vs owning. So many variables come into play. My parents have owned a condo in SW Florida for the past 30 years. Still do. So many wonderful memories we have made. Can't put a price on that! Our kids grew up going to Ft Myers every year since they were babies. We watched videos of them in Florida over our break.

Now our kids are in their early 30's we are in our early 60's. ...and go down to our condo all the time. I wouldn't have it any other way. We bought our condo 3 years ago. Fortunately able to pay cash. We have a close friend who rents it for 3 months and it covers all of my expenses.....taxes and condo fees and insurance ...for the entire year.

I will retire in 2 years and expect to spend January thru mid April down there then. Then the costs will be back on me! Yikes! Might fly back once for a 10 day stay to see my grand kids or have them shipped to us! That will be the hardest part.

[socca]

Quote:

Originally Posted by bigcmagor The annual costs of ownership of our winter home in Florida is $12,000, capital improvements aside. This is what friends pay to rent a similar home for three months in the winter. Zillow claims our home appreciated over 20% in the last thirty days. I can board an airline with my computer bag alone because every thing I need is already there. Count me as a happy second home owner.

• the owners in my Dad's FL condo complex (a 2nd home for him) were hit with a $27k per unit assessment to pay for a new roof (clay barrel tile) a few years ago. The tiles are surprisingly lightweight and fragile. They do look nice, as you'd expect for that price. The owners argued over the new roof, and half of the owners stopped speaking to the other half.

• Zillow claims that my house is worth almost 3 times more than I paid for it two years ago. A couple of months ago, Zillow's RE valuation algorithm started malfunctioning. Truth is, it's probably worth 10-15% more.

[Spanky]

Quote:

Originally Posted by socca • the owners in my Dad's FL condo complex (a 2nd home for him) were hit with a $27k per unit assessment to pay for a new roof (clay barrel tile) a few years ago.

Cha-Ching! Cha-Ching! for the Condo Association.

[ivinsfan]

Quote:

Originally Posted by Spanky Cha-Ching! Cha-Ching! for the Condo Association.

What do you mean? If there wasn't enough money to pay for reroofing an assessment is what happens. This is one of the pitfalls of owners who don't want their HOA fee raised to cover increasing costs.

Are you trying to say the board members personally profited from this levy, otherwise I find your comment confusing.

[Ronstar]

Quote:

Originally Posted by ivinsfan What do you mean? If there wasn't enough money to pay for reroofing an assessment is what happens. This is one of the pitfalls of owners who don't want their HOA fee raised to cover increasing costs. Are you trying to say the board members personally profited from this levy, otherwise I find your comment confusing.

Don't HOA board members get salaries similar to megacorp board directors?

[ivinsfan]

Quote:

Originally Posted by Ronstar Don't HOA board members get salaries similar to megacorp board directors?

Well I understood they actually get paid large amounts of B#$ching and Moaning, with a side of whining thrown in for free.

[Hdhead]

We own a second home in Florida. Honestly, would not have considered it unless I could buy with cash, which we did. Bought in 2011 (I was 57 years old) when market was beat up and now has appreciated over 50%. So it has obviously been a decent investment that we can actual enjoy. Very liquid if ever needed. Be sure to add up all the carrying costs then add 20%. For us tax, HOA, pool maintence, power, internet, tv, insurance (not cheap), another car (we keep there). I figure $15,000 annually. We very much enjoy it and would do it again.

[Meadbh]

Quote:

Originally Posted by Ronstar Don't HOA board members get salaries similar to megacorp board directors?

Nada. Unless a special resolution is passed.

[socca]

Quote:

Originally Posted by Hdhead I figure $15,000 annually.

This is consistent with my Dad's annual cost for a 2200 sq ft condo (2 BR 2 BA with den 2 car garage in a duplex). Market value $300k.

[Hdhead]

Quote:

Originally Posted by socca This is consistent with my Dad's annual cost for a 2200 sq ft condo (2 BR 2 BA with den 2 car garage in a duplex). Market value $300k.

Yup, mine has a $350k market value.

[Spanky]

Quote:

Originally Posted by ivinsfan What do you mean? If there wasn't enough money to pay for reroofing an assessment is what happens. This is one of the pitfalls of owners who don't want their HOA fee raised to cover increasing costs. Are you trying to say the board members personally profited from this levy, otherwise I find your comment confusing.

Does $27K for roof replacement sound reasonable for each unit in a condo? Unless the size of each unit is large (e.g., 3,000 sq. ft) and the building has only one or two levels, the cost seems very high.

[socca]

Quote:

Originally Posted by Spanky Does $27K for roof replacement sound reasonable for each unit in a condo? Unless the size of each unit is large (e.g., 3,000 sq. ft) and the building has only one or two levels, the cost seems very high.

• 8 duplexes in the condo association (not many units to spread the cost over)
• all one-story
• each unit around 2200 sq ft
• fancy high-end tile

The condo association was originally going to assess $41k per unit until my Dad stepped in and found a 'cheaper' quote. Still too rich for my blood.

[ivinsfan]

Quote:

Originally Posted by Spanky Does $27K for roof replacement sound reasonable for each unit in a condo? Unless the size of each unit is large (e.g., 3,000 sq. ft) and the building has only one or two levels, the cost seems very high.

Well don't forget all common areas would need to be re-roofed as well, and perhaps new flashing and/ or repairs on the roof itself .I had a relative that had a roof levy that included other maintenance items. I just think calling it a rip-off when you don't know the details is premature. Now in timeshare developments they are notorious for hiring "relatives" giving them 6 figure salaries and squandering the fees. Basically draining the place dry. On a board that is comprised of owners of single family units, I guess that wouldn't happen as much.

[Hdhead]

Quote:

Originally Posted by Spanky Does $27K for roof replacement sound reasonable for each unit in a condo? Unless the size of each unit is large (e.g., 3,000 sq. ft) and the building has only one or two levels, the cost seems very high.

Florida tile roofs are pricey. Mine is single family 2450sqft one story that cost 25k to reroof. Requires a sealed sub-roof under the tiles, then the tiles have to be cemented into place to pass hurricane force removal test required after placement. At least that is a Palm Beach county regulation.