Island property prices

[lakershaker]

I refinanced my Rattlesnake property with Webster Bank three (I think) years ago. Great rates (I have a 2.75% fixed rate 15-year), had also used Peoples in the past. Both banks had great service and the whole process was very easy. I also got a Webster HELOC in case I need extra liquidity - that was Prime -75. They had no problem with it being an island property.

[Barney Bear]

The property is 136 Bear Island. I just received notification last week that this property is on the market. However, the listing indicates that it has been for sale for 201 days. 🐻

[MAXUM]

It went on the market last year.

Price is way to high. Nice spot though.

[WeLoveTheLake]

Why would you want to buy a vacation home with borrowed money, especially now that stable genius took all the incentives away.

[thinkxingu]

Originally Posted by WeLoveTheLake

Why would you want to buy a vacation home with borrowed money, especially now that stable genius took all the incentives away.

I dunno, maybe it's because people like me and most everyone else in America would never be able to pay cash?

Sent from my SM-G950U using Winnipesaukee Forum mobile app

[Biggd]

Originally Posted by WeLoveTheLake

Why would you want to buy a vacation home with borrowed money, especially now that stable genius took all the incentives away.

I don't think people buy second homes for financial incentives. There are much better financial investments out there than the vacation home market.

[VitaBene]

Originally Posted by WeLoveTheLake

Why would you want to buy a vacation home with borrowed money, especially now that stable genius took all the incentives away.

My incentive was to have a place to spend with family and friends, not to shelter from taxes.

[Descant]

Originally Posted by WeLoveTheLake

Why would you want to buy a vacation home with borrowed money, especially now that stable genius took all the incentives away.

1. A family center for three or four generations is priceless.
2. If the second generation gets it for free, that's great.
3. If you then leave an endowment in the trust that owns it, you've provided for many generations
4. At today's interest rates it may make more sense to borrow than to take money out of your portfolio and pay capital gains taxes.

[WeLoveTheLake]

It looks like I may have offended some people, that was not my goal.
Sorry about that.

I personally would never go into debt for pleasure. That’s just me.

[ishoot308]

Originally Posted by WeLoveTheLake

Why would you want to buy a vacation home with borrowed money, especially now that stable genius took all the incentives away.

Well in "pre-virus" times using someone else's money at 3% payback then investing your money for a minimum and conservative 6% return makes sense...

Dan

[upthesaukee]

Originally Posted by WeLoveTheLake

Why would you want to buy a vacation home with borrowed money, especially now that stable genius took all the incentives away.

Forget the money for the moment.

Our kids were born in 1970 (AK) & 1973(ID). My folks bought this property in 1976. Previously, they rented in Glendale since the 60's.

We lived in ID for around 3 yrs or so, LA 7yrs, MA 8 yrs, NY 6 yrs. Then we moved here. This place was a common memory for all my kids' growing up years, regardless of where we lived. It was vacations, and when we lived close enough many weekends year round.

We're not alone. We have several friends who have similar experiences. Going 'up the 'saukee" was a huge part of the kids growing up, and that is priceless.

Borrowing money to buy a vacation / secondary home is not necessarily an investment financially, but more for memories and life experience.

Dave

[VitaBene]

Originally Posted by WeLoveTheLake

It looks like I may have offended some people, that was not my goal.
Sorry about that.

I personally would never go into debt for pleasure. ThatÂ’s just me.

I feel the same way about toys such as boats and motorcycles. When we bought our vacation home, it was not an option for us.

[Formula260SS]

Originally Posted by WeLoveTheLake

It looks like I may have offended some people, that was not my goal.
Sorry about that.

I personally would never go into debt for pleasure. That’s just me.

That's great your in that situation - not the case for most though. I'm happy every month to stroke the mortgage check for our place. I think the measure is more in your personal balance sheet at the end of the day.

[garysanfran]

How easily and securely can you service the debt with cash flow?

Handling debt responsibly can leverage your lifestyle substantially if done well.

[WeLoveTheLake]

I have seen too many people lose their property to bank repossession.
Not a pretty sight.

Again, sorry if I offended anyone. That was not the goal.

I hope we have a decent summer this year and can go out to eat.

[LakeTimes]

Originally Posted by WeLoveTheLake

Why would you want to buy a vacation home with borrowed money, especially now that stable genius took all the incentives away.

Originally Posted by WeLoveTheLake

I personally would never go into debt for pleasure. That’s just me.

I hope your comment is more about financial responsibility (which you are demonstrating I suppose) vs financial IQ, which seems to be questionable at best...

If you can't afford a second home, then one shouldn't buy one. Not sure who would disagree with that. Those are the ones who lose their homes. None the less, you are also 'investing' in a property that should appreciate over time and build you additional equity (however I would technically say houses that don't produce positive cashflow via income are actually liabilities and not assets which I'm sure will start a firestorm of debate here).

That being said, most people (and by most I'm guessing 99%+ of people) can not afford to buy a second home on Lake Winnipesaukee with just cash. If you have financial IQ, I would argue why you would ever do this anyways. With rates (not just current, but for the past 10+ years at least) you would be FAR better off putting your money into other investments getting a much higher rate of return. Call me crazy, but I even contemplated borrowing against the equity in my house and dumping that into the market weeks ago (was targeting AMAZON when it was down around $1700, but then I decided against it due to timing to get the money, busy with work. etc. etc. etc.). I know Amazon is only going to go up up and up quite a bit over time - IE: now at $2300 per share. Should have put my money where my mouth is as I would have been somewhat happy right now and VERY happy in a few years :-)

Back to the main point - I just bought on the lake a few years ago. Could I have paid cash - sure. Did I - no. I put down what I needed to get the lowerst rate I could and to of course avoid PMI and then fixed it up with cash (Studs on up - I did all the work myself and created a solid amount of equity in doing so). That being said, I am very thankful and fortunate for the position that my wife and I have put ourselves in and that we were able to do so.

The memories we will make with our friends, family, extended friends are priceless in our eyes. Who knows the future of the house generationally (we want a bigger one with more BR's when we can afford it), but it was one of the best decisions we could have made Worth every penny in our eyes.

For anyone questioning if it's the right decision to buy a second home with 'borrowed money,' if you can afford it and you love the lake, you will look back as it being one of the best decisions you could have made. Worst-case scenario - the lake wasn't for you or you need to get out of it - lake properties are rather desired and I'm confident you will make money on the sale of the home and move on without any major issue years down the line.

CHEERS to what will hopefully be another amazing summer with family and friends!

[MAXUM]

Originally Posted by garysanfran

How easily and securely can you service the debt with cash flow?

Handling debt responsibly can leverage your lifestyle substantially if done well.

100% correct.

99% of the population has no clue what "well" looks like and thus way so many get into trouble due to being over leveraged.

[codeman671]

Originally Posted by Descant

Call Lynn at (603)424-0084. That's her Merrimack office, but she works for People's branches all over the state, and northern MA. Of course, the branches are closed for walk in business right now, but they are staffed. She just did a couple of re-fi's for me. I asked her about the island stuff earlier today. Top notch about returning calls.

I did call her, thank you for the tip. Didn't realize the correlation