The 2006 National Association of Realtors® Profile of Second-Home Owners survey asked current owners what they desired most in a vacation home. Not surprisingly, a connection to nature and the pursuit of an active lifestyle were typical responses; 66 percent wish to be near water, nearly 40 percent with access to recreational activities, 38 percent in proximity to vacation or resort areas and over 30 percent near mountains and other natural attractions.

When giving their reasons for the purchase of a vacation home, a large majority (nearly 80 percent) planned to use the home for vacation or as a family retreat, followed by the desire to diversify their investment portfolio; for use as their primary residence in the future; for the tax benefits; use by a family member, friend or relative; simply because they had extra funds available. Renting to others trailed the respondents list of reasons, at 18 percent.

When describing the location of their vacation home, 29 percent were situated in rural areas, 24 percent in resorts, 22 percent in a suburb and 10 percent in a city or urban area. Detached single-family homes accounted for 67 percent of the total, 21 percent condos, 8 percent town homes, and 4 percent “other”.

Buyers of vacation homes tend to be in it for the long term, planning to keep their homes a median 10 years; the largest number of owners responding to the survey, 38 percent, expect to own their vacation home for 11 years or more.

How does your mental picture of the perfect vacation home fit these survey results?

That said, you have a few options when it comes to new construction, one of which you may have never even thought about. For a survey of each, see below.

Developer Built

Purchasing a new developer-built home instantly makes you a member of a community within a community, surrounded by people, who, like you, appreciate the advantages of new construction.

Things to Consider:

• Completion Date: If you’re trying to coordinate the sale of your current home or the termination of a lease with completion of your new home, remember that many factors can affect the completion date. Be sure to have a contingency plan.
• What’s Included: Find out what’s included in the basic model you choose, as well as the cost of “upgrades” to lighting, floor coverings, countertops, etc. that can quickly add to the final price.
• Stage of Development: Early buyers may or may not get a better deal, but also may run a greater risk with a developer without a strong track record in the area.
• Builder Reputation: Research the builder’s track record and financial condition on the Web, talk to others who have purchased homes from the builder, and speak with a trusted real estate professional.
• Consider Financing: Before signing any contract, make sure you understand all the terms and conditions of the contract, including requirements for deposits, fees, etc., and make sure that financing for your completed home is in place.*

Custom Built

Many people decide that the rewards of designing and building a one-of-a-kind home on their own lot can be worth the extra time, effort and expense required. Your only limitations are your imagination, applicable building codes, and of course your budget.

Things to Consider:

The considerations that apply to a developer-built home (above) also apply to a custom built home. In addition:

• Financing Land, Construction and Completed Home: Financing requirements for your custom built home will vary according to the project. Typically you will need to secure construction financing that may convert to a mortgage when the lending institution determines that your home is completed to their satisfaction. A trusted real estate professional can help you locate a suitable property.*
• Work with an Architect: You’ll most certainly want to work with an architect. A trusted real estate professional can help you choose a qualified architect in your area who has worked with clients with similar taste and budget. Your architect may also manage the construction and/or help you find a qualified contractor. Be sure to get all terms, conditions, and costs in writing.*

*Consult with your legal and financial advisor before you proceed.

Could the purchase of a foreclosed property be your best path to home ownership? What are some potential pitfalls? Let’s get you started by taking a look at three things you’ll need to do before you decide whether purchasing a foreclosure makes sense for you.

1. Do Your Homework – Locating, examining, and purchasing a foreclosed property requires up-front research, and lots of it. The first step is locating a foreclosed property, which is usually indicated by the public filing of a lis pendens (Latin for “lawsuit pending”) by a lender.¹ Foreclosures may be properties on which the purchaser has defaulted, as well as new builder-owned homes.
2. Evaluate the Property – Once you’ve located a property that you believe has potential, all the rules for evaluating any property apply – and more. In addition to location and the condition of the property, other factors such as the amount of outstanding liens (if any) on the property and the presence of other foreclosed properties in the neighborhood must be considered.Note: Depending on who is selling the property and how it is to be sold (through a REALTOR^®, auction bank, etc.), a thorough inspection of the property prior to sale may be difficult or impossible to arrange.
3. Plan Financing in Advance – You’ll need to have your financing plan in place before you make an offer. Financing options for a foreclosed property may vary widely; from below-market rates from the owner of a bank-owned home, to the need to pay in full on the day of sale for a property sold at a public auction.

You should also consider whether all the time and effort that you’ll need to spend to become a successful buyer of a foreclosed home will be worth it. According to Vera Gibbons, CBS Early Show financial expert and contributor, notes that price cost savings on such properties can range from 40% to as little as 5% for choice properties in sought-after locations.

¹ Foreclosure laws and regulations vary by state. Consult your legal advisor before considering the purchase of any foreclosed property.

Estimate Rental Income – Include a realistic estimate of the number of weeks the property will be likely to be rented. Calculate monthly costs such as mortgage, insurance, taxes, advertising, maintenance and projected repairs. A real estate professional can help you estimate the income potential of your property.

Look at Tax Consequences – Ask a tax professional about what how projected rental income will affect your net financial picture.

Research the Rules & Regs – Consult your legal advisor to determine whether local laws, deed covenants, homeowner association regulations or other restrictions affect your ability to rent the property.

Consider Hiring a Property Manager – If you are unwilling or unable to take a hands-on approach to the considerable effort involved in renting and maintaining your getaway, consider using the services of a property manager, especially if you’re purchasing a vacation property that isn’t near your primary home. Your real estate professional can be helpful in identifying a reputable property manager.

Well, almost always. ERA has been successful at helping to bring home buyers and sellers together precisely because most people find the notion of owning their own home compelling for a wide range of reasons, both financial and emotional. That’s why home ownership rates in America have remained at a near-record level of just under 70% for the last several years, and why home ownership continues to be a core component of achieving the American Dream.

Renting can make sense for lots of folks, particular those who plan to stay in an area for a short time. You’re the ultimate authority when it comes to knowing whether home ownership is right for you; the following is some food for thought that we believe can help you make an informed decision.

The reported reasons for purchasing a home for investment purposes differed somewhat as well; 46 percent sought rental income; 43 percent wished to diversify their investment portfolio; 23 percent primarily for the tax benefits; followed by use for vacations or a family retreat; as a place to put extra cash to work, for use by a family member, friend or relative. Eventually using the property as a primary residence trailed the list, at 12 percent.

Buyers responding to the NAR survey reported that over 37 percent of investment homes are in a suburb, 22 percent a rural area, 18 percent urban or central city, and 7 percent in a resort area. Detached single-family homes made up 63 percent of the total, 26 percent condos, 6 percent townhouses, and 5 percent “other”.

According to the survey, buyers of homes for investment purposes plan to keep them for a median period of five years; 33 percent plan to hold them for six years or more, and 12 percent plan to sell within a year of purchase.

At first blush, the notion of buying a raw land for the construction of your home – either now or in the future – sounds like a reasonable idea. Reserving the location of your choice, hedging against future increases in the price of land, and the appeal of starting with a clean slate and truly getting a home of one’s own are just three reasons why many people choose this option.