Market for Short Term Rental Properties and Vacation Homes

We live in Wilmington, North Carolina along the Cape Fear Coast which includes Wrightsville Beach and Carolina Beach. Like much of the country, the past few years have not been overly kind to the real estate market. A recently report from the local Association or Realtors noted that for the first time in years, real estate prices have been on the rise (yay!). This got me thinking about the market for second homes and short term rentals in our area and all of the deals that are currently out there. For instance, we had a friend who lived on the canal in Carolina Beach who recently sold their home for under $400,000. That same home in 2006 might have sold for $750,000.

When you start looking at second homes and short term rental properties as investments, prices have not been this attractive in years. First of all, with prices in certain vacation areas at 40-50% of their 2005-2006 values, it will only take 50% of the rental income to have the same impact as it would have 6 years ago. And according to one of my business partners whose family owns a rental property in Carolina Beach, business is good. Her family's vacancy rate on their weekly rentals is below 30% year round. She noted that it is pretty empty from December through March but, during the rest of the year, it's almost always filled.

We also talked to Brent Eckhardt, a mortgage banker here in Wilmington and he stated that there are still plenty of financing options for those looking to purchase second homes and investment properties. He noted, "Most borrowers understand that down payment requirements for many products have increased in recent years. But, with home prices falling you don't need as much money to hit those equity requirements"

If you've been kicking around the idea of buying a second home or coastal rental home, now might be the time to get off of the sidelines. If you are not familiar with given real estate market, it might be in your best interest to speak with a real estate agency who has in-depth knowledge of the area. You might also want to speak with a few rental agencies to get a realistic picture of what you can expect in terms of rental income. Keep in mind that investment property loan product and second home mortgage financing guidelines vary. Consult with a licensed mortgage professional to learn more.

FEMA Distaster Relief - Where to Go For Information

From Louisiana up to my old stomping grounds in Vermont, the past few weeks have not been kind from Mother Nature. If you are in an area that that affected by recent weather related events and are experiencing hardships from the storms, you can go to DisasterAssistance.gov and complete a questionnaire which is designed to better determine which types of assistance programs you may be eligible for. Once you've determined a course of action, you can apply online and it appears that you can check the status of your application throughout the process. I was not able to find a state by state listing of disaster relief eligible areas. If you are a reader who does find such as resource, please post a reply and we'll get it out there for everyone.

Mortgage Rate Snapshot - The Buckeye State

Mortgage rates had another strong week last week as 30 year interest rates remained fairly flat near their historic lows. Meanwhile, 15 year and 10 year mortgage rates drifted slightly lower as did many adjustable rate mortgage products. Below is a snapshot of  current mortgage rates on ForTheBestRate.com's sister web site, BurlingtonMortgage.biz. We used $200,000 refinance Ohio mortgage rates for the study. Mortgage rates are subject to change without notice so be sure to check BurlingtonMortgage.biz and/or ForTheBestRate.com to see today's mortgage rates and to review the criteria that the lenders and brokers use to quote on the web sites.

30 Year Rates (0 Points)
AimLoan.com        4.000% Note Rate, $1950 fees in APR, 4.081%  APR
Amerisave              4.125% Note Rate, $1995 fees in APR, 4.209% APR
Quicken Loans       4.375% Note Rate, $1803 fees in APR, 4.452% APR

20 Year Rates (0 Points)
AimLoan.com        3.750% Note Rate, $1950 fees in APR, 3.862%  APR
Quicken Loans       4.125% Note Rate, $1803 fees in APR, 4.230% APR

15 Year Rates (0 Points)
AimLoan.com        3.250% Note Rate, $1950 fees in APR, 3.392%  APR
Amerisave              3.250% Note Rate, $1995 fees in APR, 3.263% APR
Quicken Loans       3.625% Note Rate, $1553 fees in APR, 3.739% APR

10 Year Rates (0 Points)
AimLoan.com        3.125% Note Rate, $1950 fees in APR, 3.331%  APR
Quicken Loans       3.250% Note Rate, $2303 fees in APR, 3.494% APR

7/1 ARM Interest Rates (0 Points)
AimLoan.com        3.125% Note Rate, $1950 fees in APR, 3.202%  APR

5/1 ARM Interest Rates (0 Points)
AimLoan.com        2.750% Note Rate, $1950 fees in APR, 2.8261%  APR
Quicken Loans       3.375% Note Rate, $1553 fees in APR, 3.437% APR