A Wall Street Alternative: 5 Timely Reasons to Invest in Vacation Property

RISMEDIA, Oct. 27, 2008-The stock market is down, and if you’re like most people, your level of investing confidence has dropped as well. Yes, only those with nerves of steel feel good about playing the market right now. And if you’re not one of those hearty souls, you’re at a bit of a loss as to what to do with your nest egg. Christine Karpinski has a suggestion: Instead of pouring your money into Wall Street, why not consider Ocean Boulevard or Mountainside Drive?
“A vacation home can be a remarkably good investment right now,” says Karpinski, director of Owner Community for HomeAway.com (an online vacation home rental marketplace) and author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment (Kinney Pollack Press, 2007, ISBN: 0-9748249-9-2, $26.00).
“Stock market woes have always pushed people to look for alternate investments, and real estate is a consistent stronghold,” she says. “Yes, home values are down right now but they have always rebounded. I wouldn’t recommend buying a second home with the expectation of flipping it for a quick buck, but if you hang onto it for a while-and better still, turn it into a vacation rental property-you’ll make a nice profit.”
Not incidentally, in many areas of the country, rental demand exceeds supply. The sunshine state (Florida) is a prime example. Buy a vacation home in a market like Cape Coral, Daytona, Destin, Fort Lauderdale, Indian Rocks Beach, Kissimmee, Madeira Beach, Orlando, Panama City Beach, Sanibel Island, West Palm Beach, or Windsor Hills, says Karpinski, and you can’t lose. Even if you prefer to buy elsewhere, if you adhere to proven marketing tactics, you should be able to attract enough guests to make the purchase worth your while.
So what makes buying a vacation home so attractive right now? Karpinski explains:
There are plenty of great deals to be had. Thanks to the aftermath of the real estate bubble, home prices are down right now across the board. That means in many vacation markets, you can pick up a beach condo or a mountain cabin at a decent price. And that means that if you’ve been kicking yourself for not buying a vacation home back before prices escalated beyond all reason, you’ve got a reprieve-Karpinski says that in some markets homes are back to 2000 prices.
“Housing bubble or no housing bubble, you’re not going to get bargain basement prices on, say, a cottage right on the ocean-but if you’re willing to buy a few rows back, you’ll likely find that prices have fallen substantially,” notes Karpinski. “Because houses aren’t flying off the shelf, there’s less pressure on you to make a quick decision. You can afford to take your time, do your research, and refine your plan.”
Interest rates are attractive right now. Recently, the Federal Reserve cut interest rates by half a percentage point in an effort to shore up America’s faltering economy. And rates have been reasonably low for awhile, following earlier rate cuts toward the beginning of the year. That’s good news for anyone (anyone with good credit, that is) who’s in the market for a mortgage.
“Add the lower interest rates to the lower housing prices, and it’s clear that now is the time to buy,” says Karpinski. “Of course, for the sake of our nation’s economy, we want the real estate market to pick up, but from an individual buyer’s perspective, the combination of lots of houses for sale, low prices, and falling interest rates is hard to beat.”
If you’re worried about investing in a sluggish real estate market, relax. Recent reports indicate housing is on the rebound. Last week the National Association of Realtors® reported that, “The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in August, jumped 7.4%…and is 8.8 percent higher than August 2007.”