This article is presented with permission and written by Denise Lones, M.I.R.M., CSP
Journalists are still riding the bandwagon of fear, reporting that second home purchases are going to be no more. Just last week, I heard a pundit advising people to keep their money in their primary residence because of the “impending recession”.
This is ridiculous. Nothing could be further from the truth. Contrary to popular belief, investing in a second home is—and will continue to be—a smart buying decision for many homeowners.
We live in the wealthiest country in the world. Second home buyers are not going anywhere. While the media hems and haws about all the unfortunate people who are in hard times, they completely ignore the fact that there are others who still have lots of money to invest. And what better investment than real estate—even if it’s not your primary residence?
I’m even going so far as to make a radical prediction:
Second home purchases will rise in the next five years.
That’s right—rise! Not diminish.
1. As people age, they experience an increased need to have more quality of life and time away from home.
People love to get away. If they have the money, why not? They want a lifestyle change—the ability to go to a “home away from home”. Whether it’s a cottage in the mountains or a seaside shanty, there’s nothing like having a secondary place to escape to.
2. People have money and they want to invest it.
Traditionally, real estate is more stable than the stock market. This makes it a much more attractive investment for anyone skittish about putting their hard-earned money in the hands of Wall Street sharks.
In addition, the recent and dramatic drops in the Dow Jones have stirred up many valid fears among investors. For that very reason, real estate will continue to be the safer investment—guaranteeing that second-home buyers are here to stay.
Tell your clients about what’s going on. Don’t hold back. Crunch the numbers for them so that they see the incredible value of a second home.
3. People love to own real estate.
The very idea of being a “real estate investor” is enough to make some people purchase a property. Having that label is a sign of prestige, and raises people’s perception of themselves.
Whether or not you find this type of vanity attractive or repulsive, forget about how you think. Again, think like they think. It’s an undeniable fact that such people exist. They love nothing better than to go to cocktail parties and parade their wealth in front of others—describing their properties in detail.
Rather than despising these people for their snobbery—which many of us fall into the habit of doing—learn to love them for their ability to supercharge your business. With just a handful of wealthy investors as clients, a real estate agent can make a fortune.
4. Second-home communities are creating rental income possibilities for investors.
Many developers of second-home communities know that by including certain services, investors will take advantage of the additional income they may receive. Services such as having a concierge on duty 24/7. Or rental pools that encourage owners to rent during the off-season.
Developers have known for a long time that there is a huge market of second-home investors out there. By installing such services from the get-go, they maximize the potential of their community to attract them.
They know people will rent when they’re not there. Why pretend they’re not going to? Now, they encourage them instead. It’s a win-win for both the developer and the investor.
5. Having the ability to purchase a second home is an attractive trait to lenders.
Remember that second-home buyers have a solid track record being the owner of a first home. If a mortgage is all paid for and the buyer is looking to invest in a second one, then chances are this is a good client for the lender. It’s just plain easier to find financing if you already own a home.
Add in possible rental income and lenders become even more enthusiastic.
Side note: I know many of you reading this are struggling with mortgage payments of your own and can’t imagine buying a second home, especially in the current economic climate.
But in order to function best as a real estate agent, think outside of yourself. Think like an investor with a lot of capital. Where would you rather put your money—in volatile stocks or in a second home that you know will appreciate in value over the next 20 years?
As a real estate agent, what an opportunity it is to educate your wealthy clients about the value (and joy!) of investing in a second home rather than a Wall Street portfolio that has a higher chance of going bust.
Don’t listen to the media. Don’t listen to conventional wisdom. Don’t listen to people in financial trouble.
Second-home buyers are here to stay. Find them. Educate them. Help them make more money. When you do, you’ll see your own bank account grow.
To learn more about buying a second home on Okemo Mountain VT or Ludlow VT real estate, please call me at 802-353-1983 or visit ISellVermontRealEstate.com. You may also request a relocation package by clicking here.