The Finance Group

While some foreclosures truly are a bargain, a traditional vacation condo purchase may be more reliable.

Vacation homes are expensive, and failing to put enough money down could cost you tens of thousands of dollars in interest charges. Understanding how much you can afford and putting yourself in the best financial situation possible is extremely important when buying a condo.

Having a purpose in mind will help you to know what you’re looking for so that when you see the perfect space, you can recognize it for the ideal property that it is.

A good real estate agent can be the key to quickly finding the right buyer or seller for a vacation property.

Remember that quality of lifestyle is the goal NOT money!

DON’T ever buy a property without title insurance.

Sometimes the seller of that ugly house thinks their house is worth more than it is just because the comparable properties around it are of higher value. You also might find yourself with a money pit. If you’ve got a good contractor and you have the money, and you know you can make the ugly house pretty, go for it. But if you are buying the ugly house on the street, just expecting it to be worth more later because it is surrounded by good houses, remember it’s still the ugly house.

Setting your real estate investing goals and then finding properties that help you achieve your goals is the most important thing. Never buy in the hope of appreciation you should always find properties that more or less pay for themselves. But, cash flow may not be the most important thing to you focus on YOUR objectives. Someone that is making $150,000 at their current job is probably very short on time, but not as short on money. This person may be looking for a real e...state investment that will grow their net worth over time without them having to worry about it. In this case, buying a property that costs $200/month out of their own pocket but attracts a high quality tenant and requires no maintenance is going to be a better purchase than a property that cash flows positively $200/month but requires 5 to 10 hours of their time every month to deal with problem tenants or maintenance issues.

Replacement value: Replacement value is the amount it would cost you to rebuild if your home was destroyed by something like a fire or natural disaster. Replacement cost is what you would have to spend to remove debris and rebuild based on construction costs in your area. Replacement value is what your insurance company will come up with in order to know what to charge you for premiums. It’s also an important value to know and keep on top of, because if costs to rebuild go up, but you don’t change your coverage, you could find yourself under insured and paying out of pocket if a disaster happens. Replacement value is something to always have in mind.

Property tax value: This is the value that state, county and/or municipal governments use to figure out how much you will pay in real estate taxes on your home. These values are often similar to market values, but not always. There can be differences either higher or lower due to outdated assessments or mistakes made by those assessing the property tax values. Property tax values are also based on improvements to your home.

Beware of negative cash flows. Unless your investment pays for itself through the income it produces, you’re speculating, not investing. If that’s what you want to do, fine, just recognize that speculating creates high risk.

Avoid overpaying for a property. Little or no down payment deals cause many vacation ownership investors to buy overpriced properties. The old real estate investment adage You make money when you buy should be memorized.

Buying a resale? In the excitement of making a buy, do not pay more than you are financially able. Do not be afraid to negotiate the selling price. Be a cash buyer, if possible. Otherwise, have financial arrangements ready so you can complete a quick transaction.