What’s the most practical concern?
Eric Hagstette, Inhabit Real Estate: One important factor is convenience: how accessible the second property is going to be. Anytime you go more than an hour-and-a-half or two-hour drive time, enthusiasm diminishes. I think it’s really important to choose a second home somewhat close by. I have personal experience with a place in Bend—I have a deep love for Bend, but getting there (and getting my family there) is not very convenient.
Are there location-specific factors to think about?
EH: At Mount Hood, for example, most cabins are on leased Forest Service land, so you own the cabin but not the land, with long-term leases. You have to investigate that. In various places, there will be homeowners’ associations, so what do the bylaws allow? If you want to rent a place out to vacation owners, you have to know if that’s permissible or not. For example, I’m on a floating home right now, and we knew we couldn’t Airbnb. But other people have bought a floating home thinking they could, and it isn’t allowed here.
And the mortgage?
Jake Goodson, Living Room Realty: You can buy a second home as a literal second home, or buy as an investment property. If you’re buying as a second home, it’s got to be outside of the city limits. You’ll need 10 percent down and some reserves. I like the idea of doing it as an investment property—you put more down, but then you rent it out.
And financial considerations?
EH: There are fixed and variable rate loans—the rates are almost the same as a primary residence as long as it’s a true second home or vacation property. Underwriting guidelines are almost identical to those of a conventional primary purchase.
JG: The mortgage brokers will want to see up to six months of reserves. If you buy as an investment property, they will still want to see reserves, but they may also want to see a rent analysis. That’s something any local property management company can provide for you.
Do I need help to rent out my property?
JG: Hopefully you have an experienced real estate agent who’s already done this in the area you’re buying in. All the data is out there. Second homes at the beach or in the mountains are incredibly seductive, and it’s really hard not to fall in love—that’s where you need somebody else to remind you to check things out and think seriously.
Any guiding philosophies to keep in mind?
EH: I understand everyone wants real estate to appreciate in value, but with second homes you should really focus on enjoyment. A lot of properties just won’t appreciate anywhere near Portland’s rates. The real value is in memories, special fun times, and the escape.