Home prices continue to fall across the country, and vacation properties are no exception. Thanks to the real estate bust, bargains abound in many popular vacation and second-home markets.
Although these properties are available at attractive prices – close to their five-year lows in some areas – the bargain prices may come with adverse trade-offs. From empty condos to depreciation, there can be a downside to purchasing cheap vacation properties. (There is an alternative to letting your cottage sit empty all year, but turning a profit won’t be easy. Check out Vacation Home Or Income-Producing Investment?)
Vacant Units: Had you visited a condominium in a popular beach town five years ago, the parking lot would have been full. Today, however, many of these same condo buildings have such high vacancy rates that there is a noticeable lack of vehicles. Foreclosures and poor rental activity have left many of the units empty, with no one living in or renting the properties. Additionally, in certain coastal areas prone to strong hurricane seasons, the high costs associated with insurance, which can equal or exceed monthly mortgage payments, have forced otherwise financially comfortable owners to sell or allow their properties to go into the foreclosure process.
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