WASHINGTON 鈥� Every weekend, thousands of cars trudge back from the eastern shore and across the Bay Bridge, the drivers having just spent hundreds or thousands to rent out motels, condos and homes on coast. It鈥檚 easy to dream about what life would be like owning one of those residences.
Before making it a reality, there are lots of factors to consider that you wouldn鈥檛 worry about around D.C.
While some financial advisers will tell you to buy a second home with cash, over the last year most people financed homes in Ocean City, Maryland, the more traditional way 鈥� with a mortgage 鈥� said Brian Shane, a realtor with Coldwell Banker Residential Brokerage.
Thanks to the financial crisis of a few years ago, banks have gotten smarter and stingier about giving out those second loans, and now often want you to have a down payment of 20 to 30 percent before giving you that home loan.
And if you think you鈥檒l make all that money back just by renting out the home, you鈥檒l probably be in for a rude awakening.
鈥淚t has a lot of different variables,鈥� Shane said. 鈥淎re you in a direct, ocean-front, single family home? Where you can charge thousands of dollars per week? Or are you in a studio on the bay side with no view of anything?”
鈥淟ocation, location, location,鈥� Shane said, admitting it鈥檚 clich茅 but noting: 鈥淭hat鈥檚 the name of the game here.鈥�
Then there are other costs to consider, costs which aren鈥檛 always relevant to a lot of homeowners.
鈥淗ave you thought about insurance on your unit? Have you thought about condo fees? Taxes? Carrying costs? If you want to have a place that鈥檚 rented out, you need to have some money in the bank in case your renter calls and says 鈥榟ey, your air conditioner just broke.鈥欌��
Condo fees aren鈥檛 included in the mortgage, but it鈥檚 another expense that can suck money right out of your wallet.
鈥淚t鈥檒l add up,鈥� Shane said. 鈥淪ome of these condos, they鈥檙e asking you for [thousands] a month, which will go toward building insurance, maintenance, the pool, making sure the roof and the parking lot are taken care of.”
鈥淔olks who just have a regular, single family home, they鈥檙e not thinking about condo fees. Maybe they鈥檝e never dealt with condo fees. But that鈥檚 a big part of what you鈥檙e paying for. The benefit of shared ownership does have a cost.鈥�
In Ocean City alone, over 90 percent of the roughly 32,000 homes and condos there are considered 鈥渘on-owner occupied,鈥� which means they鈥檙e either someone鈥檚 vacation home or rented out.
