Jun 04, 2010

Buying a Vacation Home in a Development: What to Look For

Vacation home developments aren't doing too well financially these days -- even the reputable builders are struggling, if not going under.

But, according to research gathered by Carl Shepherd, of HomeAway, the vacation home market isn't dead, nor is it just for the rich. The average income of vacation home buyers has actually fallen in recent years, to around $87,000. Most of them plan to make the numbers work by renting the place out when they're not staying there.

So if you're among those considering buying a vacation home, what should you look for? Here are seven tips for buying in a development, provided (at a recent seminar) by Dan Collins of IMI Executives. His advice can, in some cases, be adapted for buyers of regular vacation homes, or year-round homes located in developments.

1) Look for a place on a great piece of land, or one with excellent added amenities. (That's the "location, location, location" advice that's always been true for real estate, and is perhaps truer than ever in the down economy.)

2) Check out the master plan. No matter how nice your house-to-be will be, what surrounds it is equally important. The plan should reflect wise designs, such as an acceptable level of density between homes, and desirable amenities.

3) Choose a reputable developer. That's also truer than ever, since the disreputable ones are going out of business faster than ever, sometimes before finishing the project.

4) Make sure the developer has the financial capacity to see the project through. Ask lots of questions, on topics such as the company's financial strength, and how much debt it will be taking on for this particular project. If you see that a major loan is coming from only one lender, consider that a red flag -- if that lender pulls out or requires repayment before the project is stable, there could be trouble.

5) Favor developments where the major amenities have already been built or are under construction. Otherwise, you might never see them!

6) Make sure that the area is within reasonable driving distance of a solid population of other potential buyers.

7) Look for perks, such as family-friendly club policies (so the grandkids can swim in the pool) or several weeks' free stay in local hotels while you wait for the place to be built, giving you a chance to get to know the area.

Happy travels!