Financial Considerations When Buying a Beach Home in Carlsbad
If you are interested in buying a beach home or second home in Carlsbad (or anywhere else for that matter), there are some important financial considerations to keep in mind to make your purchase a success and hopefully avoid any surprises, financial and otherwise.
Here are some other essential things to know about buying a second home.
As is the case of buying any home, knowing the budget for your purchase is essential, along with all the other costs associated with having a second home in addition to your primary one.
The big cost is the purchase itself, whether you are in a position to pay cash, or use a mortgage to finance part of the transaction.
If you are using a loan having a documented pre-approval is key so you know, from completing the pre-approval process, what you can afford and what the monthly payment could be to cover property taxes, the loan, interest, and homeowners insurance. And in our competitive market no seller is going to accept an offer unless you have proof of your financial ability to close.
If you are a cash buyer, be prepared to provide a Proof of Funds (POF) with your offer. This could be copies of financial statements, or a letter from your financial institution to document you have sufficient funds for the purchase and all closing costs.
Don’t forget to factor in HOA fees if you are buying a condo, town home, or a home in an HOA community. HOA fees in Carlsbad can range from less than $100 per month to over $500 per month (TIP: watch for what these fees actually cover as they can vary substantially by community).
You should also take into account your personal budget. What you want and need on a monthly basis, based on your lifestyle and discretionary spending, may be different from what the lender says you qualify to borrow.
The cost of buying your beach home (purchase price, closing costs, inspections) is not the only expense to keep in mind. If you already own a home you should be familiar with some of these expenses, but a second home at the beach could entail some other costs. Here are some issues to keep in mind:
FURNISHING YOUR BEACH HOME
Unless you buy it furnished, which is not common in our area, you will need to furnish your second home (e.g., new furniture and furnishings like towels, bedding and kitchen items; can you bring extras from home; how about buying at local garage sales, estate sales and warehouses).
Do you want this home to be turn-key so you can travel and then settle in?
These will vary depending on personal usage, and a monthly cost even when you are not in residence. Keep in mind gas, electric, phone (unless you are only using your smartphone), cable (who wants to be without Internet?), water, trash pick-up, and sewer.
You'll like find the usual maintenance costs for your beach home as they are with any home, inside and out. That will vary if you buy a condo when exterior maintenance is part of the fees you pay. What about yard care, if you have one, when you are not present? And there may be other maintenance issues you would rather pay someone else to take care of when you are not in residence or don’t want to go the DIY route. Keep in mind that if you buy at home right at the beach the maintenance costs can be higher for the exterior due to wind, salt air, moisture, and possible erosion issues.
There may be increased travel expenses depending on how you use your beach home, and how often, and how far away it is. But consider the savings you might have by giving up on other vacation since you have a wonderful second home to enjoy.
I'm not a tax professional and I cannot provide tax advice, so you might want to discuss your tax situation with your CPA. As you likely know the tax laws changed and you should understand the implications for any tax deductions from a second home, e.g., mortgage interest, property taxes.
RENTING YOUR BEACH HOME
Rome second/beach home buyers don’t want to rent this properties out since it’s their personal home. But if you do want to rent when you are not using the home that can be an option depending on the community restrictions, if any. Keep in mind that if you hire a property management company to help there will be costs for that, along with providing a cleaning service between renters. You will also want to consult your CPA for advice on how renting your home, and rental income, impacts your taxes.
Depending on the home you buy there may be improvements you wish to make - updating the kitchen, remodeling the master bath - that you should plan for. The beach home may be perfectly usable as it is but you might desire making changes over time, which makes it easier on the budget!
WHAT DOES A BEACH HOME COST IN CARLSBAD?
Well, that depends on what you want and need, and where it will be. The type of home (single family detached vs. condo or town home) has a big impact on pricing, too. And a huge factor is proximity to the beaches and ocean views.
If you want to be on the ocean or right across the street you can expect to pay in excess of $2,000,000 for a single family detached home (e.g., 2 oceanfront options currently include a 10,000 SF estate priced at $29,950,000, and a 2087 SF home priced at $5,400,000; there is also a large home across the Coast Road from the ocean priced from $2,695,000 to $2,995,000).
Town homes very close to the ocean and with views, including 6 that are new construction close to the Village, range from about $1.6M up to $3.5M. There is an oceanfront condo for $2,150,000 in Carlsbad Village with wonderful views.
There are quite a few more options if you are open to housing further inland in Carlsbad, but still relatively close to the beach, and prices are more reasonable. Check out the July Carlsbad Housing Market Report for details.
You can start your search for a Carlsbad home by checking out the complete inventory - simply click on the photo to the right >>>>>>>>.
And explore homes for sale in other North San Diego County communities here.
Why not give me a call at (760) 840-1360 so we can discuss your housing needs and budget, then I can send you a list of the homes that fit your criteria. I can also set up a custom search for you so you will see new listings and changes when they occur in the MLS.