- What do you think of a
vacation home as an investment?
You can buy a
vacation home today for investment purposes as well as enjoyment. And yes, there are tax
benefits.
Some people buy a vacation home to use as a permanent
retirement home later, which allows them to get ahead on their payments. Another benefit
is that the interest and property taxes on a vacation home are tax-deductible.
Some real estate experts predict that vacation homes will
appreciate in value due to rising demand from the aging Baby Boom generation. You also can
depreciate the property if you live in the house less than 14 days a year.
You also need to consider whether you can afford to carry two
mortgages, pay for the extra utilities and maintenance costs, and how this investment fits
into your total personal finance picture.
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- Do builders give
financing?
Builders often include financing
programs to help move more buyers into a project early on. If it's a buyer's market in
your area, you can be sure that developers will offer incentives such as low-down-payment
financing.
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- Where can I get a list of
home builders?
For a list of home builders,
contact the National Association of Home Builders at 201 15th St., N.W., Washington, DC
20005; (202) 822-0200, or your local Building Industry Association office.
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- Should I hire a home
inspector for a new home?
Most experts recommend
having a home inspected, new or old. For new home, ask the builder to provide copies of
any inspection reports on the property, architectural plans, surveys and pertinent
construction documents for your inspector to review. Your inspector should either be a
professional home inspector, an engineer, an architect or a contractor.
If you hire a professional inspector, look for one who
belongs to one of the home inspection trade organizations. The American Society of Home
Inspectors (ASHI) has developed formal inspection guidelines and a professional code of
ethics for its members. Membership to ASHI is not automatic; proven field experience and
technical knowledge about structures and their various systems and appliances are a
prerequisite.
Rates for the service vary greatly. Many inspectors charge
about $400, but costs go up with the scope of the inspection.
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- What are some new-home
cautions?
When you buy a resale home, you can find
out a lot more about the property and the neighborhood before you buy than when you buy a
new home.
Land to support new-home developments usually is located on
the outskirts of town. Potential buyers should ask the developer about future access to
public transit, entertainment activities, shopping centers, churches and schools. Find out
how far it is to the nearest library, for example.
Local zoning ordinances also should be reviewed. A rather
remote area can turn into a fast-food-chain haven within a couple of years. Try to ensure
that the neighborhood, if not strictly residential, will not begin sprawling out of
control.
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- What about new versus
previously owned?
Although new homes typically
have a higher sales price than comparable existing homes, buyers are willing to spend more
upfront with an understanding that part of what they are paying for is assured low
maintenance costs. A builder's warranty, along with brand-new roof, appliances, furnace
and other operating systems that make major repairs unnecessary, work together to
counteract possible slower appreciation initially.
Data from the U.S. Census Bureau's 1991 American Housing
Survey suggest that operating costs per house are lowest for brand-new homes, slightly
higher for relatively new existing homes but lower on average for older existing homes.
Measured per square foot of living space, however, operating costs are consistently higher
for progressively older existing homes.
Utility costs are the largest component of operating costs.
Energy consumption per square foot depends on size of the home, insulation, window
quality, air leakage and efficiency of the furnace. Operating costs also include
expenditures for both routine maintenance and major repairs.
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- What are
considerations to buying a new home?
Builders may
have a target market in mind for their new-home projects. Some may tout communities as
glamorous to upscale urban professionals seeking amenities such as a golf course, hot tubs
and tennis courts. Yet a playground and swimming pool might be central to a project geared
toward families while the next one offers seniors a walking trail and an easy-to-care-for
yard.
Do not be tempted to move into a "glamorous"
community where you might be able to afford the house but not the lifestyle. In addition,
similar-looking new houses often come complete with restrictions imposed by the developer
on house color, landscaping, renovations and anything else a homeowner possibly could do
to make their house deviate from the preferred look.
Marketing experts try to appeal to buyer's tastes by their
promoting images for their developments. Don't buy into it. Form your own opinions and
only buy a home where you feel comfortable. After all, you're going to have to live there.
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