Who's Ready for a Second Home?

Real-estate prices are lower than they've been in years. But before buying, look at this checklist.
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) -- You may be one of the lucky 88.8% who are secure in their job and blessed enough to have saved up enough to take advantage of the deluge of deals on that vacation getaway you've always dreamed of. It seems like the greatest time to buy: A glut of foreclosures and bank-owned homes have made second-home markets like Miami, Palm Springs, Long Island and Maine prime targets for landing the coveted "other" address.

But before you hand in you mortgage pre-approval letter and get into the nitty-gritty of negotiations, here's a checklist of what you should ask yourself.

Prices can't go lower?

The house is bank-owned and the previous owner was asking a whopping 40% more than the current asking price when it slipped out of his hands and back to the mortgage holder. The price has attracted former flippers and first-time buyers into what could become a bidding war, or at least that's what the listing broker is telling you. But what seems like a rock-bottom price today could just be another stopping point on the road to even lower prices. Are you comfortable holding this property if its price drops another 20%? Do you foresee any event that could force you to sell in the near five-year future, most likely at a loss?

What kind of commute am I buying?

There are two kinds of vacation homes, one accessed by car and the other by plane. Weekend homes are ideally no further than a two-hour commute from your main residence, allowing for short one- or two-night getaways that don't require a week's vacation just to utilize your investment. Before you commit to that second home, commit to traveling to the area at least twice during various commuting hours to see what type of traffic you can expect.

Do I want a far-away fixer?

You may have experience as a fixer-upper when it comes to real estate and the idea of gutting a kitchen or upgrading to copper plumbing may sound like a cinch. But when dealing with a second home, you'll likely have to rely on the advice and help of others to service your property while you're back home earning the money to pay the bills. Be realistic when it comes to high-stress projects that may require time and a considerable capital investment, especially in foreclosure markets where you're not likely to recoup the additional investment in a foreseeable amount of time. You'll also have to find contractors and workers who don't mind working via email and digital camera.

Have I really been everywhere?

Have you already been to Paris, summered in Sardinia and long since seen South America? If you ask anyone with a second home, you'll likely hear how his or her globetrotting ended with the decision to take an additional residence. Whether for financial reasons or just the willingness to commit to a decision, second-home owners usually spend most or all of their vacation time where the money goes. If you've yet to tack all the destinations on your fantasy travel map, you'll likely regret spending so much time and money on a single place when you'd really rather be somewhere far, far away.

Can Aunt Beth or cousin Cora come?

Sure, you can afford that 4,000-squre foot desert or beachfront pad now that prices have dropped, but are you prepared for the inevitable favors, pleas and invitations that your extended family and friends will expect when your family of three buys that 6-bedroom house. Unless you plan on outright lying, larger homes always bring with them the obligation of invites and free stays where you'll likely be providing the food, housekeeping and booze. Be modest and talk down that house. A three-bedroom can easily become a two-bedroom with a den when explaining to your mother-in-law why she's best to stay at the local Four Seasons. Plus, the second-home envy of coworkers and pay czars is lessened with at least talking smaller, more humble dwellings.

Can you really bank on rental income?

It's a quick income generator for idle second homes, but before you list that getaway villa on VRBO.com, keep in mind that several cities like Laguna Beach, Calif., and Aspen, Colo., have specific city ordinances and require permits and city approval when renting a home for fewer than 30 days. A Laguna Beach realtor sited neighbors, then complained to the city following a week of loud partiers that resulted in the forfeiture of his summer-vacation business and also resulted in his house falling into short sale. Don't rely on eager realtors to inform you of city laws; call the chamber of commerce or city housing authority to verify that potential rental income is a possibility before it's too late.

Do you really want to know thy neighbors?

Before you commit to a leisure life in the Sun Belt or beach city, be sure you're ready for the new social guard that awaits. When buying a second home in a retirement town, be sure you're ready for the laidback lifestyle that could force unwarranted personal pressures and unexpected aging issues. In beach areas, keep in mind that a great deal of life focuses on youth and sports with a bohemian beach sprit that could catch avid couch potatoes off guard. While second-home buyers often think of their potential home solely as a real-estate investment, the overall success of the purchase is much more about whether the experience lives up to lofty expectations.

-- Reported by Michael Martin of JetSetReport.com in Los Angeles.

Michael Martin is the managing editor of JetSetReport.com -- a luxury travel and lifestyle guide based in Los Angeles and London. His work has appeared in In Style, Blackbook, Elle, U.K.'s Red magazine, ITV and BBC.