Debunking Vacation Home Myths

Don’t Let False Assumptions Keep You From Your Vacation Home Dreams!

I’ve heard a lot more talk than usual lately about vacation homes. The COVID-19 pandemic is scaring people everywhere, but a lot of people who live in larger cities with dense populations, like Manhattan in New York, various parts of California, Atlanta, and even in comparatively smaller metropolitan areas have heightened fears over the need to get away. These people are looking to leave these areas more than before, but even prior to the pandemic, they were already looking to leave.

On top of trying to escape a COVID-19 infection, many people are fearful about the recent rioting and looting in these larger cities and are looking for environments that are safer and can give them more space to spread out. Political elements play a role too. When people don’t like what’s going on in their city, county, or state, they vote with their feet by getting out.

And many of those people are moving right down here to Florida, primarily because the weather, no state income tax, and the proximity to the beach are desirable. People have always been looking to move to Florida, but what's been happening with our market now in reaction to the pandemic is that people are fast-tracking those moves. Additionally, the fact that people are now able to work remotely makes them realize that they’re not tethered to a specific location for their job, so they’re gearing up to move where they want to live rather than where they have to live.

We’re seeing more and more data showing people readily leaving those larger cities. One Manhattan moving company recently shared that their work has increased by 300% over the last few months alone. People are getting out of dodge, and the majority of them are moving south.

That brings us back to the topic of vacation homes. With an increase in wanting to get away from crowded areas inevitably comes an increase in the purchase of vacation homes across the country. I’ve had many customers recently ask me all kinds of questions about the rules surrounding purchasing vacation homes, and it’s become evident that debunking some myths is necessary.

First, it’s important to understand the difference between your primary residence and your vacation home: Your primary residence is your main home where you live full time and work full time. Your vacation home, or your second home, is somewhere you go to get away from your primary home for an extended period of time. For people in the Northeast, they may have one down here in southwest Florida, and in winter, they come down to enjoy warmer weather. It goes the other way too — many people from Florida go up to vacation homes in the mountains of Georgia. A vacation home can be many different things, in many different locations.

Whether you’re looking to buy a vacation home for the first time or add another one to your address book, it’s important to realize which myths you might think are standing in your way.

Myth No. 1: You need to have 20% or even 30% for a down payment on a vacation home.

This assumption is not true at all. When it comes to purchasing a vacation home, you only have to have 10% to put toward a down payment before you’re allowed to purchase the home. What’s more is that 5% of that can be a gift from a family member, leaving you with just 5% of your own to put down. You do not need more than 10% down for a vacation home purchase.

Myth No. 2: You must own your primary residence before you can own a vacation home.

This is also not true. There are no parameters for your primary residence before purchasing a vacation home. Let’s say your primary residence is in the middle of Montana and you rent that home. There is absolutely nothing stopping you from purchasing a vacation home down here in Florida or wherever else you might want. You do not have to own your current primary residence in order to purchase a vacation home.

Myth No. 3: The vacation home you purchase must be at least 50 miles away from your primary residence to classify as a vacation home.

Now, in most cases, this is actually true, and you do want to make sure your vacation home is at least 50 miles away. But it’s not always true. A great example of this is right here in Lee County in Southwest Florida. This is such a unique area — woods and rivers to the east and beaches and islands to the west, all within 50 miles of each other. So, someone can live in the east but buy a vacation home in the west where they get away for activities they can’t do in the east, like boating. And that’s totally fine. You can buy a vacation home within the same county as long as it makes sense. If you buy a house three streets over and call it a vacation home because it has a pool, that’s probably not going to work.

Myth No. 4: You can only have one vacation home.

There’s no truth to this myth, and you can absolutely own more than one vacation home at a time. If your primary residence is in New York but you like to vacation in Florida, you can have a vacation home anywhere you enjoy down here. And if you also like to ski in Colorado in the winter, then you can have your very own condo in Aspen too. And if you’d like to tack on a third vacation home in the desert of Arizona, and a fourth one in the mountains of North Carolina, there’s no reason you can’t.

What many people are now doing is purchasing vacation homes for retirement, but several years before they actually retire. They want to get locked in with specific rates and price points, so they buy now, travel back and forth to treat it as a vacation home, and plan on moving into it in a few years when they do finally retire. There’s nothing wrong with that scenario either.

If you or someone you know is looking to purchase a vacation home, make sure you’re armed with this information so you’re not kept from purchasing a home you love. If you have any questions or concerns, we’re always here to help give us a call anytime.