PORT ARANSAS, Texas - The purchase of a second home or condo on the coast has many of the same mechanics as buying a primary residence in an inland community. However, there are additional costs and some important considerations.
Despite what you may have heard in the news, there are plenty of lenders eager to loan money to qualified buyers. That remains true for the purchase of vacation properties as well. Loans for detached, single-family homes are more readily available. Some lenders do not participate in condotel loans. However, there are plenty that do. It is important to note that the terms will differ and it is advisable to do your homework in advance.
Speaking of doing things in advance, one of the most important things a potential buyer should do is to get pre-qualified for a loan. This does two things: It helps define an appropriate spending limit and it also increases your bargaining power with sellers. A contract/offer from a pre-qualified buyer carries more clout.
In the immortal words of Benjamin Franklin, "In this world nothing can be said to be certain, except death and taxes." Ad Valorem/property taxes on vacation properties do not qualify for the homestead exemptions that are applied to a primary residence. In Port Aransas, a good assumption to calculate a "ball park" amount for annual taxes on any given property is to use 2% of the sales price. This will of course change over time, but this serves as a good starting point.
Hurricanes are a fact of life for those of us that live and own property on the coast. Here are two important things to remember: Insure your property and get out of the way. There are three insurance policies that are required by lenders and appropriate for all island property owners: homeowners, windstorm and flood.
Inland property owners are familiar with homeowners insurance. These are typically broad coverage policies that offer protection for the dwelling, possessions and personal liability.
Insurance for windstorm coverage can be costly, but it is of critical importance. In Texas, coverage is typically provided by the Texas Windstorm Insurance Association (TWIA). These supplementary policies cover Gulf Coast property owners in the event of catastrophic loss resulting from wind and/or hail.
The National Flood Insurance Program (NFIP) is managed by FEMA. Flood damage is not typically covered by a homeowners policy. Coverage through the NFIP is relatively affordable with policies on most properties costing $500 or less per year.
Generally speaking, Home Owner Association (HOA) fees in a condominium development include coverage for general liability, windstorm and flood. In most cases, owners only need to consider additional coverage for contents and furnishings.
Have Questions...Get Answers
Although some of these subjects may seem a bit foreign, they are all quite common for those of us in a coastal real estate market. Remember that there is no such thing as a stupid question. If the team at Port Aransas Realty can answer any questions or be of any assistance, we would love to hear from you.
Thank you for visiting the Port Aransas real estate blog.
Keith McMullin – Broker/Realtor