With the uncertainty of the stock market, people are looking for alternative ways to invest. Real estate has always been a good place to invest for the long term. It’s true that real estate values ​​are down right now; however, historically, the real estate market has always rebounded. Over the last several years we have seen an extraordinary increase in market value, and investors have been able to buy and “trade in” property quickly for a profit. Those days have passed; however, for the buyer who is willing to hold the property for the long term, a handsome profit can be made.

There is a lot of news today about the housing market crash and a large number of foreclosures. One should not expect that to be the case in many tourist areas. Many tourist areas have seen relatively few foreclosures and almost no subprime lending. You’re not likely to find a depressed market in beachfront condos, but for those willing to walk half a block to the beach, prices can be significantly lower than just a year ago. This is not so much due to the economic crisis, but because of excess construction that created too much supply for demand. As existing real estate inventory is depleted, we should see a mild rebound in property values. Values ​​could fall further, but it’s not likely as construction has slowed and excess inventory has dwindled. For the buyer who intends to keep the property as a long-term investment in a family vacation home or as a retirement home, there should eventually be a return on investment.

Most families plan their vacations well in advance; however, many just want to take advantage of a weekend getaway. It is not always easy to make impromptu accommodation arrangements. This is not a problem when you own your own vacation home. When buying a vacation home, you should consider your preferred lifestyle. After all, the purpose is to buy a place for you and your family to enjoy. Are you better suited for a condo, house, or townhome? Do you prefer beachfront, inland island or a golf villa? Do you prefer the beach or the bay for boating and fishing? Do you prefer winter sports?

In order to help pay for the vacation home, consider renting it out to tourists when you’re not using it yourself. During this period of uncertainty, many people are staying in the state and traveling closer to home. Homes and condos in resort communities provide all the comforts of home with the option of dining inside or out with many activities that don’t cost a lot of money, such as pools and beaches or fishing off piers and piers. There is always the option of mixing in some paid activities. A vacation home rental is often cheaper for a family than a couple of hotel rooms when occupancy limits and comfort prohibit a family of five or six from occupying a single room.

For buyers, mortgage rates are cooperating. Rates are a bit higher for investment properties, but if your property qualifies as a second home, you can save a point or two. Often a monthly mortgage payment is less than or equal to one week’s rental income during peak season. The mortgage could be paid with twelve weeks rent. There is no guarantee that you will have a twelve week rental at peak season prices, and there are other expenses to consider such as utilities, condo or association, property taxes, property management, etc. A useful consideration is that there are a growing number of retirees who are choosing to leave the cold climate of the northern states for the “winter” in the warmer climate of the coast and south. These people add to the support of the holiday home. In other words, it may not cover all of your expenses; however, it will cover most of it as your property grows in value. And don’t forget about the potentially beneficial income tax deductions.

When calculating your earnings, keep in mind that there are tax deductions allowed when renting out your home when you don’t use it yourself. While the following is believed to be true, you should consult an accountant or tax professional before relying on the information and do not hesitate to call the Internal Revenue Service for clarification.

You can rent your vacation home up to fourteen days a year without having to declare it on your income statement. If you rent it for more than that, you must declare the rent; however, you can deduct many expenses. The majority of your partnership must cover deductible expenses. You take deductions for all the same things that are deducted for any rental property, insurance, utilities, repairs, and improvements. Let’s go over this. Unless the rules change, if your personal use amounts to more than fourteen days per year, or more than 10% of the number of days the home is rented, whichever is greater, the home is considered your residence. If you use it for less than fourteen days, or less than 10% of the time that it is offered for rent to others, it is considered a rental property.

What about those who buy a vacation home and are considering retiring while they still own it? If one occupies that vacation home for at least two of the five years before retirement, couples could qualify for up to $500,000 in tax-free earnings, or $250,000 for a single person, on the sale. The first home would have to be sold first, but that home may also qualify if you stay within that five-year period. Check with a tax professional or the IRS before taking the plunge to make sure the rule still applies.

No one should buy a vacation rental property assuming it will pay for itself, especially if a large mortgage is involved. If you are lucky enough to pay cash or have a very small mortgage, you are more likely to make an annual profit. Ask to see a rental history for the property you are considering. If it has not been used as a rental before, ask your agent to look up histories of comparable properties. If you can cover your mortgage, taxes, association fees, insurance, utilities, and unexpected repairs, you may see a profit, or at least have a second home that renters pay for, and you can make your profit from the future sale. . If you can’t see a profit from the rental, is the difference worth the investment for the future and your ability to vacation there for as long as you own it?

Keep in mind that the peak rental season may be the season that you and your family will want to use the property, usually the summer. Try to plan your vacation in the spring or fall when the weather is still good and there are few tourists. If you have school-age children, plan for the first week of summer vacation or the last week before school starts. Most families do not travel the first week after the end of the semester and plan to return home just before school starts to shop for clothes and school supplies. Of course, leave July to your tenants. You might also want to use it around Christmas and if you are within a short travel time window, aim for those long weekends that aren’t federal holidays, but perhaps staff development days when the kids aren’t around. at school. While many tourist areas, like South Padre Island, see a lot of traffic and visitors on those long federal holiday weekends, there aren’t as many overnight guests as one might think. You are more likely to see local visitors who live close enough to go home at night. If you want to rent on those long weekends to overnight stayers, try offering a special rate, rather than trying to jack up the rate. You’ll come close to attracting those who are traveling all weekend, and some rental is better than nothing.

Choosing the right place to invest is crucial. Look for a tourist location with affordable housing. Find a place with good properties that are affordable for you. Jennifer Openshaw, financial editor for AOL Family, recommends choosing locations with a lot of inventory under $350,000. The location should be within a few hours of travel time from major cities. There must be an active vacation rental market there, and plenty of activities for the family and of course for your lifestyle. The city must have room to grow.

While other locations may be a better fit for you, I of course think one should look in South Padre Island, TX where I live and work. If you need to be beachfront or bayfront, and you can use a smaller condo, you can stay under that $350,000 mark. For those willing to take a step back to the other side of Gulf Blvd., which runs the length of the beachfront skyscrapers, there are many, many condos and townhomes to choose from with easy access to the beach and priced from $100,000 to $350,000, depending on your needs. . In fact, the entire island is only a mile wide from the bay to the gulf, so one can easily walk from the bay to the beach. There are many nice and fairly new 2 and 3 bedroom condos in the $180,000 to $250,000 range. Just look at our listings to see. In the past, SPI has seen annual increases in property values ​​of up to 20%, and while that may not happen again, we will see more realistic and consistent increases in the future. South Padre Island attracts buyers from all over the state. It is an hour’s drive from McAllen, less than an hour from the Valley Regional Airport in Harlingen or the Brownsville/South Padre Island Airport in Brownsville. Driving time is about 4 hours from San Antonio, about 6 hours from Houston and Austin, and only about 3 hours from Corpus Christi. While there are other coastal resorts closer to some of these cities, South Padre Island has superior beaches, bays, and accommodations, at least in the opinion of many.

Only about five miles of the roughly thirty-five mile long island have been settled, and we see potential for growth to the north. New developments are already pushing north.

As for activities, South Padre Island is a popular place for boating and fishing, fun at the water park at Schlitterbahn, bird watching with over 300 recorded species, windsurfing, kitesurfing, and sailing. The island has an entertainment district that offers bayside restaurants and open-air clubs where you can dine casually and listen to all kinds of music. Here one can watch the fireworks over the bay every Friday night from Memorial Day to Labor Day. For those brave enough, there are bungee jumping and go-karts. For those who want to dine well, there are several restaurants to choose from. And in just thirty minutes, you can visit Mexico for dining, shopping, and a taste of Mexican culture and crafts. See our page on things to do. Just over the Queen Isabella Memorial Causeway, eighteen holes of golf await the golfer on one of the best golf courses in the Rio Grande Valley. And there are plenty of affordable properties there, too, with good vacation rental histories.