Do you have clients who rent in the same vacation destination again and again? Have they been hinting at someday buying a seasonal second home? Hippo, a home insurance company, compiled five signs that buyers are ready to take the plunge.
1. Their finances are in order. If your clients are serious about buying a second home, then they also have to be serious about the costs involved, such as utility bills, maintenance fees, insurance premiums and possible homeowners association dues. If they plan to rent out the property to other vacationers, help them calculate their potential return on investment. Find out if the idea fits in with their long-term financial goals. Here are some of the questions you can pose to help clients figure out if they’re prepared:
Do you have emergency savings (at least three to six months’ worth of take-home pay)?
Can you make a 20 percent downpayment?
If you have children, have you already put aside enough money for a college fund?
Can you still put away enough money for retirement?
Have you paid off your existing home?
2. They’re hungry for research. If clients are asking in-depth questions about the area and specific properties, there’s a good chance they’re preparing to buy a vacation home. Encourage them to visit during different parts of the year if they’re planning to spend a lot of time there. Introduce them to amenities in the area, such as grocery stores, restaurants, areas of recreation, and even clinics and dentists’ offices.
3. They want details on the market. More pointed, nuanced questions denote serious consideration. You can anticipate their needs by sending market updates regularly and even putting these clients on a listing drip campaign. Help them get comfortable with the idea of owning a vacation home by analyzing sales price changes and buyer demand in the vacation market in question.
4. They have a plan. Find out how your clients plan to use a property. If they want to rent out the place, then they’ll need help finding a property manager (perhaps you?), cleaning service, insurance provider, maintenance people and other resources. Or, if they plan to manage it themselves, they’ll need to know how to list the rental and accept payment.
5. They are prepared to pay the taxes involved. Income from rental properties must be included on state and federal tax returns. Your client may also be expected to collect lodging taxes. In Fort Lauderdale, Fla., for example, vacationers pay a 12 percent lodging tax.