There are three particularly important aspects you must give extra consideration when you’re thinking of buying or selling a lake home.
In this video, Lake Homes Realty’s CEO, Glenn S. Phillips goes over why the points are more important when it comes to lake real estate.
Water. How deep is the water? How far is it from the main body of water? How is the boat traffic? Does the water level vary by season? Every lake has its own water characteristic, in fact, different areas of the same lake may vary so these factors can affect the price of a home when buying or selling.
Sun. Which way the home faces relative to the sun is important to the value of a lake home. Some might prefer sunrise or sunset views. If a lake home is situated due north, or in a cove with hills and trees, it views of sunrises or sunsets may even be fully obstructed.
Earth. The terrain on which the home is situated is important to consider. Is it waterfront or water access? Did you know some property is waterfront without water access? What kind of septic system will this property support (as many locations are rural)?
Because lake real estate is unique with many factors to consider when buying or selling, it’s important that you have a lake expert by your side.
Here at Lake Homes Realty, we’ve got our own licensed agents who are highly specialized in all facets of the lake and the lake lifestyle. If you need help with lake real estate questions or are looking for an expert to help you buy or sell your lake home, be sure to contact us!
There’s no question that the pandemic has rendered city life stifling. With no bars, movie theaters, or indoor dining, the draw of big cities has dissolved. As a result, more people are investing in lake houses for the freedom the city doesn’t provide anymore. Real estate appraiser and consultant Jonathan Miller told CNN that he calls these “co-primary” homes.
Instead of spending more time in one home and occasionally vacationing, those with co-primary residences spend equal time at both. According to Forbes, people are especially seeking markets where you can live comfortably “off the grid.” As the pandemic continues, this trend isn’t slowing down. If you’re looking to make a lake house your co-primary home, check out the key reasons driving this trend.
A simple rationale for this trend is that due to the pandemic, a city home isn’t necessary anymore. Many people stayed in cities for their in-person obligations. However, more shutdowns of offices and social life defeat the purpose of owning a city home. According to brokerage firm Miller Samuel Inc., Manhattan Sales have fallen 54% from last year. Instead, New York dwellers are investing in lake houses and other vacation homes in places like Connecticut and the Hudson Valley. This way, they can go back and forth between their co-primary homes whenever they need.
Before COVID-19, a thriving social scene, and employment opportunities were a huge draw for urban environments. Living in a small apartment didn’t matter because many people practically lived at the office. However, as non-essential workers continue to work remotely, spacious homes are a bigger priority. With more people choosing open spaces over proximity to a now fading city life, investing in lake houses has become popular. According to a Zillow survey, among Americans working at home currently, 66% would consider moving homes if their job continued remotely. This majority position marks a clear priority shift from access to work to access to space.
Many buyers cannot afford a lake house as a co-primary residence. These individuals may move to the lake full-time, in part, because it’s less expensive. This trend is especially true for buyers who have lost their jobs due to the pandemic. The country’s unemployment rate rose from 3.8% in February to 13.0% in May. According to the Pew Research Center, even these numbers might be underreported. When money is scarce, why stay in a pricey urban apartment when you can retreat to a less expensive lake house? Saving on expenses is just one reason why city renters are buying lake houses as a first home.
Typically, buyers see lake houses as an investment—something to put stock in and reap the benefits later. However, now that things are more distressing and uncertain, buyers want something they can enjoy immediately. For similar reasons, rentals have been harder to come by. Robert Nelson, sales managing director for Brown Harris Stevens, told CNN that those who may typically rent their lake house to guests are opting to spend more time at their vacation residence. When everything else is up in the air, being at a lake house offers a sense of immediate security.
This Pandemic Was the Last Straw
For many buyers, investing in lake houses during the pandemic was not a split-second decision. They had been mulling over it for a while, and COVID-19 was the final straw that prompted the purchase. In New York specifically, an influx of people have left the city in favor of more remote locations. According to CNBC, there are not enough homes on the market in nearby vacation areas to meet the current demand. Many of those who said “maybe one day” to their dream of a lake house are deciding that day is today.
With so much uncertainty ahead, owning a lake house provides a much-needed sense of warmth and comfort. Are you interested in hopping on the bandwagon? Check out our listings in multiple states at Lakehomes.com!
Lake Homes Realty named Terry and Sherrie Norton 2017’s Splash Award recipients at its annual Agent Summit, which took place Oct. 17-20, 2017. Additionally, both members of the Lake Wedowee, AL team are now recognized as Lake Homes Realty Premier Agents.
“We are incredibly honored, humbled and appreciative of this recognition of our hard work,” this year’s winners said. “It is an honor to be chosen from among our fellow agents who all work so hard to attain their goals. It really is an incredible honor.”
The Splash Award Defined
The award, presented to company’s Realty Agent of the Year, is given to the Lake Homes Realty agent, or agent team, with the overall best performance across a number of important accomplishments.
“Winning the Splash Award is an honor and a great way for LHR to say that our company appreciates our hard work,” the Nortons said. “Maintaining and working toward this goal again for the coming year is certainly a great incentive.”
Eligibility is open to agents who have been licensed with Lake Homes Realty for a minimum of 24 months by Aug. 31,2017.
These agents must also have completed at least 12 transactions on either the buyer or seller side of a sale within a 12 month evaluation period, which began Sept. 1, 2016 and concluded on Aug. 31.
Lake Homes Realty’s Terry (center) and Sherrie (right middle) Norton named 2017 Agents of the Year at annual Agent Summit on Oct. 19, 2017.
Additionally, agents had to have closed $3.5 million or greater in transaction volume during this time in order to gain award eligibility.
“Eligible agents are then ranked, relative to each other, by performance in a number of key areas. These include overall effective commission per side and percent increase of year-over-year transaction volume in dollars,” explained Glenn S. Phillips, Lake Homes Realty CEO.
Additional areas assessed include average number of days it takes from closing to office file completion, total number of sides closed and number of listings in Multiple Listing Services as of Sept, 1, 2017.
Agents are also ranked by total transaction volume closed in dollars.
This volume is defined by sale price apart from the number of sides an agent represents for a given transaction. Referral transactions are not included in the total transaction volume.
Determining the Agent of the Year
To determine the Splash Award winner, the best performance in each of the criteria areas is given one point. The next best performance receives two points, the third receives three points and so forth.
The points from each area are then totaled with the lowest total score named the winner of this prestigious award.
“In the event of a tie in total points, the tie-breaker is determined by the highest transaction volume between those tied during the evaluation period,” Phillips explained.
For 2017, the Splash Award winners and the second best overall performing agent were separated by justone point.
“Lake Homes agents are the special forces unit of real estate industry,” Phillips said. “They are the lake real estate experts and their knowledge and skills continue to be reinforced year-after-year.”
2017 Agents of the Year
“We feel extremely blessed by our past success,” they said. “We have to continue to strive to always do our best.”
During the 12-month evaluation period alone, the team sold more than $7.7 millionin lake property.
The Nortons are proven local lake real estate experts who are passionate not about selling property, rather their passion is for selling the lake experience.
Their credibility is further made evident by their relationships among both buyers and sellers. From Sept. 2016 to Aug. 2017, the Premier Agents team represented 55 total sides closed.
The Key is Happy Clients
“Our motto is ‘we work hard for our clients.’ Our clients are our success,” the couple emphasized. “There is great satisfaction in a job well done and in knowing we have provided the best service possible to our clients.”
Additionally, the Nortons’ transaction volume increased by an impressive 44.15 percent in the last year.
“Hopefully clients and potential clients who read about our awards and success will feel confidence in LHR,” they said, “and about our abilities to represent them as they list their home or purchase a new home.
Lake Homes Realty is the largest, lake-focused real estate brokerage in the nation. The company business model focuses on creating a national market reach for local properties and agents.
Phillips and his wife Doris, who serves as Lake Homes Realty’s Chief Operating Officer, shared that treating their agents with respect and confidence in their abilities is paramount to the company’s success.
“We always say we have four clients: the buyer, the seller, the agent, and our staff,” the COO explained. “Just like we want Lake Homes buyers and sellers to be happy with us, we strive to maintain positive relationships with our agents. Their happiness is what drives their success, and ultimately, the success of Lake Homes Realty.”
This mindset is proving its worth as LHR is currently licensed in 16 states, and counting, and belongs to more than 70 MLSs.
“We are so proud to be a member of the LHR team. Simply put, we could not provide the customer service we provide if we did not work for such an amazing company,” the Nortons said. “We can proudly state [Lake Homes Realty] is the leader in lake home sales. We know we work for the best.”
The mortgage interest deduction and the state and local property tax deduction are probably the best-known tax incentives for homeownership and real estate investment.
That’s no surprise. Roughly nine out of 10 home buyers borrow money to buy a home, meaning they likely pay some form of mortgage interest. And property taxes are a near-universal expense for homeowners.
Both deductions are crucial to making homeownership possible for the average buyer.
But there are other real estate-related tax incentives that might not be as familiar.
Capital gains exclusion
All homeowners hope their property will appreciate.
The flip side is that anyone selling an asset that has gone up in value may get hit with a tax bill for the profit, also known as the capital gain. Thankfully, homeowners have some help in their corner.
An individual selling his or her principal home can qualify for an exclusion of up to $250,000 in capital gains, and married people who file jointly may qualify for an exclusion of up to $500,000.
There’s no need to report gains up to these limits on a tax return.
To take the exclusion, sellers must pass the IRS’ ownership and use test, but it’s fairly straightforward.
Essentially, they must own the property and have used it as a primary residence for a total of two out of the five years preceding the sale. Even if owners currently rent the property and depreciate it — as we’ll discuss shortly — they might still meet the use and ownership test and qualify for the exclusion. And even if sellers haven’t lived in the home during the past five years, they might qualify for a partial exclusion.
That’s a big help, as well as a recognition of the fact that millions of Americans depend on their home to build wealth throughout their lives.
1031 like-kind exchanges
The “1031 like-kind exchange” sounds like it’s ripped right from an accountancy textbook, but it’s actually fairly easy to understand.
Let’s say a person owns a single-family, detached rental home as part of an investment portfolio. If the home appreciates, the owner will likely owe capital gains taxes in the event of a sale — unless he or she uses the proceeds to buy a condominium in a market with higher rents.
Because the single-family home and the condo are both investment properties, tax law treats them as “like kind.” And because this transaction is a “like-kind exchange,” the owner won’t pay capital gains tax until he or she sells the new property.
This gives investors an incentive to put any realized gains back into the economy rather than pocketing them. And it’s a big deal: Major real estate investors and mom-and-pop investors alike can benefit.
Depreciation on rental property
Homeowners who rent a portion or all of their property might be able to “depreciate” that asset, which means deducting some of the cost of the property each year on their tax return.
That could result in a significant income tax deduction.
If you do earn money on the sale of your home after depreciation is taken into account, you’ll generally owe tax on the depreciated portion at the 25 percent “depreciation recapture” rate.
Any other gains will be taxed as capital gains.
Changes may be coming
For more than a century, the United States has recognized the benefits of homeownership and real estate investment.
It strengthens communities and helps individuals grow nest eggs for themselves. However, Congress is considering tax reform proposals that could have sweeping implications for real estate incentives.
That’s something to keep an eye on.
Everyone’s tax situation is unique. Before you count on any of these incentives, you may want to talk with a tax professional. But if you’re ready to take the plunge into homeownership or real estate investment, tax benefits — some obvious and others perhaps less so — are out there.
NerdWallet is a Lake Homes Realty / LakeHomes.com content partner providing real estate news and commentary. Its content is produced independently of Lake Homes Realty and LakeHomes.com.
There are things that you should know before you purchase a vacation home. Within this list you will learn what to look for, what is a great bonus to your investment, and what to stay away from. Buying a vacation home is a big responsibility, be sure to do your research before you buy.
1. Spend Time Before You Buy
Get to know the lake. Vacation in other nearby rentals and spend time on the water in the area. Find out if the area seems to be what you are looking for, be it a quiet retreat or a party cove. Different lakes have different personalities, and even different areas within the same lake can have a unique vibe to them.
2. Expect Normal Expenses
Just like purchasing a primary residence, lake homes also come with year-round expenses beyond the mortgage (if the home was financed). These costs include things like insurance, property taxes, and lawn maintenance in the off-season.
You should also factor into your budget the potential costs associated with replacing large appliances in the home like the water heater. You must also think about the monthly utility bills for the property like water, electric, gas, and others.
3. Find a Property Manager
Face it; although you love this home, it’s not your primary residence. It will, therefore, be unoccupied during certain times of the year. While you’re not there, consider hiring a property manager or a caretaker to maintain the residence.
You can work with any number of management companies that will assign your property to one of their managers, so you don’t have to handle the search alone. Another option is to hire a live-in caretaker to stay in the home during the times you’re not there. Like property managers, live-in caretakers are paid a salary to maintain the property in your absence.
Which direction you choose is up to your personal preference; just know that it will need to be done.
4. Research the Demand
Lakes and lake rentals are a hot commodity for much of the year in many places but don’t expect to keep the house rented out year-round. While the lake is a great backdrop for a getaway any time of the year, demand for lake rentals is not nearly as high during cold months.
As a result, you will need to adjust prices accordingly. You may only be able to charge half (or less) of the summer rate if you want to keep year-round occupancy high.
Sometimes the excitement and anticipation for owning a second home on the lake can be a driving force in the purchasing decision. Make sure you stay rational and look at all of what is involved before you officially make your move!
