- The Washington Times - Friday, August 9, 2002

Vacation time is about over, and after the drive home from a relaxing respite, whether it was in the mountains, at the coast or lake or in the country, the mind starts churning. Vacation homes make us think they are better than the house we have at home, especially with the relaxing environment.

Who couldn't be relaxed every day with a walk on the beach after work? Why not buy a small farm within driving distance of work? What's stopping you from getting a lake home?

Purchasing extra real estate is what I call good investing but don't just jump in where angels fear to tread. Get to know the product before you move into a new area of investing about which you know nothing.

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In cities and towns where commuting is a regional pastime, there's always the dream of moving out a bit to get away from the hustle and bustle to enjoy the small-town, country atmosphere. However, the prudent buyer will investigate more than just prices.

How long would it really take for you to get home every night from work?

Before you quickly discard the argument about the additional 30 minutes it would take each way (meaning that instead of half an hour each way to work, you would spend an hour each way), take off your relaxation hat and put on your commuter's helmet for a minute.

Regardless of how spent you may be at the end of your workday, once you get home tonight, instead of walking into the house, drive around in traffic for another half-hour. To get a real feel of how this would change your life, do it for a week.

So you want the lake property as an investment. Perfect. There's nothing like owning a vacation home that is there whenever you want it. However, get the names of some investor owners who have houses in the area where you want to buy and find out what it means to own a vacation home that is rented out to hundreds of people per year.

There's the opening of the property, the maintenance throughout the year and then sealing it up for the off-season.

Will the house rent enough weeks and weekends to cover the monthly payment you must pay whether it rents or not?

Let's create a fictitious property valued at $250,000: a single-family home, three bedrooms, three baths, and it sleeps eight. If you get in the property with a 20 percent down payment (usually the minimum required for investment properties), your loan will be for $200,000. Assuming a 30-year fixed-rate mortgage with 7 percent interest, the monthly payment runs about $1,330. With an additional $300 thrown in for taxes and insurance, you're up to $1,630 that means you have to earn revenue of $19,560 per year to pay the mortgage.

Then there's the upkeep, just like on your own home besides the furnishings to provide and maintain on the inside (something a renter would handle in a traditional real estate investment scenario).

That farm property would really be nice, wouldn't it? Oh, by the way, do you have a Bush Hog to cut the fields of lawn which sure will eat up more gas than your push mower? You might want to get an estimate on how much it costs to mend the fence surrounding your property. Plus, how much more insurance is it going to take to cover 20 acres instead of your quarter acre?

As in the decision-making process about what type of property you want for your personal residence, nontraditional rental properties or properties that don't fit in your field of familiarity will take more study to see if they fit in your comfort level and make financial sense.

M. Anthony Carr, director of communications for the Northern Virginia Association of Realtors, has written about real estate for more than 12 years. Reach him by e-mail ([email protected]).

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