<p>Due to the high prices of NJ real estate even in this down market some young kids at work are discussing purchasing condos in places they like to vacation. They will continue to rent in NJ but their real estate ownership will be in places like Myrtle Beach, the Poconos or somewhere in Florida.</p>
<p>Is anyone else seeing this- so far we have 3 kids that have done that and I am told several young teachers that they know have done the same thing.</p>
<p>Haven’t seen this trend at all – most young people have a hard time getting a downpayment saved for their primary residence. If they’re buying a condo, unless the condo is FHA approved, they’ll have to have at least 5% of the purchase price from their own savings. Then they’ll have the carrying costs on the condo and the rent where they live.</p>
<p>Maybe they plan on renting out the condo since it’s in a vacation area?</p>
<p>Haven’t heard of this yet.
As parent of an employed 26 yo renting in NJ, I wouldn’t recommend this strategy.
It’s hard enough managing RE as a primary residence; I’d be wary of owning many states away as a novice in real estate. Just MHO.</p>
<p>Son would like to stay in our still very expensive northern NJ area (although I’d asked him about relocating to more affordable areas).
He’s happy renting for now in a lovely renovated old home and saving his pennies for his next move.</p>
<p>They are both personal use and rental. They do not plan on purchasing a primary residence in NJ due to the cost.</p>
<p>My nephew lives in Manhattan. He and his long-term girlfriend do quite well, but have decided to rent their apartment and buy a second home outside of the city. That was the first time I’d heard of anyone doing that!</p>
<p>You can find condos in Myrtle Beach for under $100K - not oceanfront, but not bad either.</p>
<p>Even if you don’t rent it, you are talking maybe $800/month including condo fees. If they rent it out for some of the time, even less.</p>
<p>Even adding in rent somewhere else, it is still cheaper than buying a house for $6-800K, and you don’t need to come up with $60K+ for a down payment.</p>
<p>Being a long-distance owner or landlord has its own headaches though.</p>
<p>I think most are talking condos at under $150k- mostly less and they claim that there are services that watch the place. I think they got the idea from several people that had vacation homes plus owned a home in NJ. Most of the kids are into certain things- golf, hunting and fishing, snow areas etc so they buy in areas where those things are available.</p>
<p>Maine - some kid told me you could pick up a cabin in Maine for $50k in an area he likes to hunt and fish.</p>
<p>When one of our s’s worked in a city on the coast of FL we discussed his buying (or co-buying) a condo that, should he move, could be used as a vacation/rental place for all of us. He ended up not, which turned out to be the right choice. The market tanked, many condos inthe building were vacant or foreclosed on and the remaiing owners had to pay a huge portion of the association fees. Then when he moved there could have been issues re: what his official state of residence was , and while FL has no state tax, workign in another state has its own issues. Now he lives/works across country and has better financial reserves/cashflow to do what he chooses, which includes considering leavig work to get an advanced degree.</p>
<p>Son calls himself a proud renter, keeps packing boxes in the garage and considers himself free to make changes.</p>
<p>If they are going to spend alot of vacation time there, why not? But it doesn’t make sense if they want to be able to travel around and see alot of places…</p>
<p>If a condo is less than $100k, it works out to be less than $600/month. It’s a good way to take advantage of the low mortgage rate, except for the HOA fee.</p>
<p>HOA fees can be a big problem. In recent years I’ve used craigslist, ebay, and priceline to get fabulous vacation deals. I would not want to be trying to rent out my vacation home right now.</p>
<p>Maybe they’re just buying time shares? They’d have to be well-heeled weekend warriors to be buying vacation condos hundreds of miles away from work.</p>
<p>Egads. Time shares are lke flushing $$ down the commode.</p>
<p>This is a terrible investment. The costs of owning will surpass and tax savings or rental income. Plus you are still paying to live elsewhere. Most of those places are overbuilt, and so if you need to sell, you are up a creek. Liquid cash is far more valuable than a condo in Myrtle Beach (a place I’ve been to and would not choose to live).</p>
<p>The economics of owning a residence that you don’t “need”, surrounded by other owners who don’t “need” their residences is perilous in today’s economy. If your 150,000 condo becomes worth 100,000 your downpayment is up in smoke, and you still have the annual carrying and maintenance costs.</p>
<p>There was an explosion in vacation home prices from about 1999 to 2005 or so. In most of those places, I’d say values today are maybe 70-80% of what they were at the peak, if you’re lucky. Maybe this is the bottom, but I seriously wonder. There is a worldwide slowdown that is being leaned against with as much force as can be brought to bear, and its not showing much results.</p>
<p>I don’t think its a good time to own real estate that you don’t need. That means two houses, or a bigger house that you truly can use. Looking for the bottom in prices has lots of risks for average people.</p>
<p>It depends on the area. Thanks to lowe mortgage rate, the inventory in my area is at an all time low.</p>
<p>I actually have seen condo’s in florida selling for 30-50k It’d be dirt cheap to buy up one of those with 20 percent down - the thing that kills you down there are the insurances. I highly doubt those prices will get any lower so it’s probably a good time to be buying them up.</p>
<p>^ Cheap is as cheap does. You might find $30k would come in handy later for something you actually need. Like a down payment on a home near your job. The OP asked if renting where you work and buying a cheap condo in the poconos, Florida or myrtle beach is a good idea. The answer is almost certainly no.</p>
<p>^^then you sell it. I would encourage my kids if they were interested in purchasing something in a vacation location. Real estate is a viable investment vehicle. For a young person putting money into a 401K and investing in some real estate offer diversification along with a tangible vacation location. A vacation rental also give them tax write-offs they wouldn’t necessarily have and gives them equity to leverage just as if they had socked it away in an IRA or some other vehicle.</p>