Is this idea for owning a second home on Winnipesaukee crazy?
 

My wife and I are looking at some vacation time for this summer up on
Winni. No surprises with the rates and lack of availability. But we started thinking about owning a second home up there. Something small. 2 bed 600 sq ft cottage etc. I see a few for under 200k on the water. This would be a bit tight in the budget.

So we started thinking. Why not buy a place and rent it out for most of the season? We take it for a week here and there. Some quick math shows this plan would seriously cut back the expenses of a second home. In time it may pay for itself. I am extremely handy so even heavy maintaince is not an issue.

I am thinking something is off. Why wouldn't everyone be doing this? What am I not considering? Someone toss some reality at me please.

The advantage of owning vs renting is access.

When you rent it to others you reduce your access.

With enough rentals the expense to you is greatly reduced but so is your access.

Now you are back to where you started but with a significant financial commitment that can cost a bundle to get out of.

All this assumes that you can keep it rented with good tenants who don't wreck the place.

If it only works with much of the season rented, you may want to reconsider.

Taxes, insurance, 2nd internet bill, that really expensive floaty toy you can't be without.

When we bought our 2 br 680 sq ft cabin 3 years ago we thought we would rent it.... The reality is. We use it every weekend and really don't want to deal with renters. There's a lot more than just the mortgage to a second home. Now with that said, if it's in a condo community with good rental history that's a possibility

But once you get that Glastron in the water you'll want to go up after work and every weekend:liplick:

There are a lot of extra responsibilities when owning a second place, ESPECIALLY if money and time is tight. Who will landscape/plow, how quickly can you respond to a repair need, will you have the repair money ready, etc. etc. Add to that the next level of responsibility with renting--insurance, finding/screening responsible renters, cleaning/preparing for rental transitions, etc.

As for the property itself, if it's under $200k on the water on Winni there might be hiccups: needs a ton of work, not a great water frontage, seasonal, association, etc. Some of those might not be issues for you, but all would limit how easy/often it could be rented, how much you could charge, and what it might cost for maintenance.

And, at the very end, is a doubling of the complexities in your life. To me, that's a double whammy if cash strapped.

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I know many people that rent but it's work and as others have said, it reduces your access. The prime rental months are July and August. That's when you get the most money. If you're fine with giving up prime time at your second home to others then you will be able to cover expenses. We rented for 6 years and we always had trouble finding a nice place because my wife couldn't put in her vacation time until January. By then the good places were gone and rents kept gong up every year. We finally bought with the intentions of renting but we find that we want to be there every weekend. We bought a fixer upper because that's the only way we could afford something with water access. After all the hard work I find it hard to let renters possibly abuse it. Two years and we are still working on it. Once the boat goes in the water the work on the house stops.

It can work. But as others have said, run all the numbers in detail so you know all of the expenses. If you are considering a condo or a townhome, be sure your first question is " Are weekly rentals allowed " and get it in writing before you get to deep into a specific property.

Many associations do not allow weekly rentals. Some have 30 day minimum rental policy which will most likely not work for your situation.

On the other hand.......if you find a good deal that is in need of repair you could remodel and greatly increase the value of the property.
You also could enter into a contract with one of the local rental agencies that would screen applicants,collect rents and maintain the property for a %.
I think the key to success is finding the right property.

We rent our place for two weeks each summer and it's a pain. You have to do a lot of work to prepare for renters being in your place, including removing your boat.


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I don't know if you live in New Hampshire or if you are out of state but you should consider the taxes you will pay on a camp. New Hampshire doesn’t have sales tax or state income taxes. They do tax interest and dividends. Therefore they need high property taxes to support the state and towns. If you live and work in the state it is not bad because your overall tax burden is some of the lowest in the nation. If you are a resident in another state you pay the price. For lake side properties and properties with views the property taxes are even higher. The Tax Foundation found that homeowners in these states paid the most in property taxes:
1. New Jersey
2. Illinois
3. New Hampshire
4. Connecticut
5. Wisconsin

He also would have to pay income tax on the rental if he rented it for more than two weeks. And the NH Rooms and Meals tax would need be paid, but that is usually added to the price so is paid by the renter. 9% still adds to the cost for the renters so you would have to figure that into the equation. Would they be willing to pay the extra 9%?

Its not too Crazy
 

All of the above is good advice. I bought my camp 12 years ago. Replaced the bathroom and did some landscaping work. I went into it with the intention of using it as a rental. I contracted with a local RE company to manage the rentals and place for each turnover. They took 20% of the rent for their services. I actually was able to book all of the rentals through HomeAway and blocked out the weeks that I would be there (2). I or the RE agency screened the renters and they inspected it each Saturday after the renters left before returning the security deposit. The rents covered my property taxes and insurance as well as helped offset the loan payments somewhat. If you find the right place go for it if the numbers work out. 3 years ago I retired so I no longer rent it. The 9 years I rented it made early retirement possible. Good luck!

As someone with experience in this kind of endeavor, I agree with most of the previous comments.

Banks and mortgage companies often will not look favorably at condos with high investor ratios (too many short term rents, not enough full time residents.
Banks may require a higher down payment and higher interest rate for investment property. If it isn't investment property they will not include much of the expected rents as income to pay the mortgage. Hard to believe, but they are not in business to help you. They are there for the shareholders.

It can be done, but probably more drawbacks than just going out and buying a nice 2-3 family home as an investment. Being a landlord/handyman long distance just isn't the same as something in your home town or in a resort development that is set up specifically for rental programs. For these, you just have to figure out how to get them to rent your place first instead of the identical unit next door.
Many books at the library about how to b e a landlord
One of the best I think, is "Landlording" by Leigh Robinson. There's a related web site.
Good luck.

If taxes are a concern, check out Moultonborough. Their taxes are really affordable IMO.

Great feedback here, thanks!
I am a NH resident. Being Self-employed I have some flexibility with my time.

It would be tough owning and not always going up.

So it looks like this will cover a good amount of the expenses. Since winter is basically a zero rental, I have to assume it will cover about half of everything? Lots of variables I know to nail down a %, but the thoughts of it covering most or all of the mortgage and expenses based on 2-3 good months of rent is just not going to happen.

There is a segment of the population, e.g. teachers, ski staff, who will rent from September through June at reduced rates. They may not cover expenses, but they will pay some portion, and somebody is there to prevent freeze-up and other winter problems as well as, say, vandalism, that is a more likely with a vacant property. Note: Some condos are summer only as Laconia shuts off the water for those places where it is not buried deep enough.

it can work
I started 11 years ago 400 sqft, on the lake, in a cottage association, tight budget, needed work

and enjoying every second of it

The posts here raise really legitimate points, but my husband and I bought a small summer cottage over twenty years ago, and it's been one of the best things we ever did. In the beginning, we had just a seasonal camp that we rented for all but a couple of primetime summer weeks, and which we used ourselves on weekends in the spring and fall. With our work schedules, this was fine, and we never had any problems renting or with tenants, either renting independently or through an agency. Yes, it's work, but you get to be in a beautiful place while you're doing the preparation, etc., plus it keeps your place in good shape. Our cottage got cleaner and cleaner through the rental season.

Ten years ago, we tore down the cottage and built a year round house to accommodate our larger family, but we still rented most prime-time weeks. Just last year, we switched the balance so that now we use the place more than we rent. Our summer cottage has worked hard for us and it's been adaptable as our lives have changed, our children have grown, etc. Now we have a wonderful year round getaway that our children and grandchildren also enjoy. I wouldn't change any of it.

described our last ten yeats to a T
now in the process of the same, this week the new place will be finished!!!

Some do this and apparently are quite good at it.

My neighbor rents newer home in Summer season. Home not used in Winter.

Let's see.

These are items that I know of.

He has replaced oven/stove, microwave, dishwasher, both toilets, washer/dryer, television set (two times) and took down/apart the home theater system. There is more. I can't remember.

Then there is the trash removal. Paid Saturday cleanings. Moving lawn.

Not sure if mandatory to state to home owners insurance company that home is a rental.

The last place that we rented 3 years ago in Meredith was a 3br log cabin on the water for $2800. The lady lived in it through the winter months and rented it out all summer long. She moved in with a friend during the summer and I'm sure she had to pay rent. Personally, now that I'm an owner, I could never give up my summers at the lake. That's the reason I bought in the first place.

Renting out your home...
 

My family has been doing it for years. July 4th through Labor Day. We enjoy the place during the spring and fall and make quite a bit of $ during the summer to pay the bills. We have managed the rental process ourselves and now use Bayside Rentals with great success. If Meredith would lower its tax rate, I might give up the rental process.

My friends have a cabin in Wonalancet that they built as an investment and a getaway from the hustle and bustle of Moultonboro. They rent it 3-4 times a year and get enough to pay the taxes and pocket a little. It's a lot of work getting it ready, cleaning and making sure everything is working. They use Home Away for the advertising

Compared to some of the surrounding towns, Meredith's taxes are reasonable. My house is in Meredith and that's the reason I bought there.

Taxes in Meredith have been creeping up no doubt about that.

That's because values are creeping back up after being down for so long. That's a good thing if you're looking to sell but bad if you're looking to buy. I bought my place almost 3 years ago and it's value/assessment has increased along with the tax bill but I still think it's much cheaper than many of the surrounding towns.

Well with assessments creeping up the tax rate should go in the opposite direction however that hasn't been happening.

Right. The market changes much faster than the assessments. Most towns also show a relationship of assessment to market value e.g. +3% or 98% or something similar, don't they? In any event, market values change rapidly and assessments are only done every so often and then recalculated a few years later. They are used for two different purposes, so a 1:1 comparison is probably faulty.

you are not buying the house, you are creating and setting up the memories which are priceless, and also developing a family atmosphere for the whole family

- from a 36 year old that has owned his place for 11 years

since moving up here from southern New Hampshire nearly 20 years ago ive always been amazed what people will pay to live on this lake. just recently i no of a couple who paid 1.5 house is nice but needs updating, but nothing crazy and yes there on top of there neighbors. all i can say is "thanks for paying my property taxes"

You're still a pup. Hopefully something doesn't come your way that throws a wrench in your plans. I owned my first place in Alton Bay at 24 years old then I got married, built a new home and had 3 kids so I couldn't afford 2 homes at the time. One had to go and it was the vacation home. It took me quite a while to get back. The memories are wonderful but at 63 I have quite a few that are higher on the list than the times spent at the lake.

Lots of info here.
I am taking this away from it.

1. Lots of work.
2. Expect the unexpected. Unforeseen expenses, bad renters.
3. You will likely NOT cover all expenses. So you need to be able to afford some of this.
4. Do it and be happy in the end :)

So here is the NEXT QUESTION...
 

What are the ideal areas to get the small place for under 200k on the water from Paugus Bay to Meredith?

I often see small cottages in clusters going up the road on Paugus bay toward the weirs. I am sure they are condos of some kind. These are perfect.

Any any experience with what % down you need to put for a second home mortgage and other bank expectations?

Any input is appreciated.

Usually 20% is the minimum for a second home mortgage.

Anyone familiar with owning a condo at Misty harbor resort?

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Well, that's what we did, and then it became our only home.

Just sayin. :cheers:

At 200K to work with that doesn't give you many options. Probably will have to deal with going into a condo/townhouse or some other association.

Trouble with associations... rules can change at any time and may not be to your liking. Same with the fees. Many will not accept renters and if they do today that could change tomorrow.

mortgage requirements
 

JasonG--

in response to your question about mortgage requirements, we are considering an investment property purchase at the lake, and are going through Meredith Vill SAvings Bank. Their requirement list to us includes:

--last 2 years' W2's
--last 2 years' tax returns
--all bank and investment account statements for the last several months
--most recent pay stubs
--copies of RE tax and insurance bills for all real estate owned

I think there was more that they asked for, but those are the big ones. I'm guessing other banks / credit unions' requirements would be similar.

Wow, I went thru a re-fi at MVSB on my primary home here on the lake a couple of years ago. Been here at the same house for 40 years, worked at the same local business for 30 years;, they required only about half that documentation. Just saying, investment (2nd home) financing must be a lot more stringent!!