Buying a Home in a Resort Community: Pros and Cons

Will buying a resort home turn your life into an endless vacation?

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Have you ever stayed at a vacation resort and thought, “I’d love to own one of these homes?” Resort communities typically offer beautiful scenery, fabulous amenities, upscale homes, and an abundance of recreational activities such as golfing, skiing, or beaches.

Of course nothing is perfect, and while resort home ownership sounds dreamy, it also poses challenges. This article will address these – focusing in particular on homes in places where tourism is a major part of the local economy.

Various Pros to Purchasing a Resort Home

Since resorts are typically situated in the most beautiful places, they can offer advantages like:

  • Scenic views. Your house may look out over mountain vistas or expanses of white beaches and sparkling ocean. There’s something inherently relaxing about these types of surroundings.
  • Recreation and amenities. If you’re the active type -- whether you enjoy snow skiing, golfing, spa visits, or relaxing on the beach -- you can probably find a resort community geared for your favorite activity. And if you plan to live in the resort home full-time, or visit regularly, you’ll have lots of time to take advantage of these and other amenities. If you own a place within the resort, you aren’t pressured to squeeze all the activities you love into a one- or two-week period. You won’t be competing with others to choose the best visiting times -- the choicest powder days to ski, for example, or the warmest clear weather days for golfing.
  • More night life, shopping, and entertainment options than in similar sized towns. Resorts are typically crowded with shops offering everything from top of the line Gucci bags and Hermes scarves to cheap local tchotchkes. A wide variety of restaurants and nightclubs are also common in resort areas. Resorts often attract high quality performers, and might offer such things as classical symphony concerts under the mountain stars, rock concerts by well-known artists, or ballets by visiting professional dance companies.
  • A select group of fellow residents. Resorts tend to attract people from all over, resulting in a more interesting and diverse population than many other towns of a similar size.
  • Wide variety of homes and condominiums to choose from. Depending where you're looking, you might, for example, find an elaborate log home nestled in the pines next to the ski runs in a Colorado ski resort, or a high-end ocean front condominium on the top of a Florida high-rise.

Con #1: Resort Homes Command High Prices

Resort living can be great, but it typically doesn’t come cheap. Resorts commonly attract people with money to spend, and home prices tend to reflect this. To get an idea of the current price range of homes in the area you are interested in, contact a knowledgeable real estate professional in that area, or do some online research using a real estate website such as Zillow or Trulia.

How good an investment your prospective resort-community home might be depends on many factors. You might wish to query a real estate professional in the area to get an idea about how the housing market in the community you are interested reacts during upturns and downturns in the economy. You also might try independent research online to pick up pricing trends for the area (this will take some digging, however, since there is no central place to look).

Con #2: High Cost of Living and Taxes in Resort Communities

The daily cost of living in a resort is typically higher than average, for everything from gas to groceries. Since resort communities are less likely to have large chain discount stores, (some resorts actually ban chains or franchises), you’ll likely need to shop at smaller, more expensive stores (or burn gas and time travelling to nearby cities to do your shopping).

Taxes are often higher in resorts, as well. In many states, in addition to any state and county sales taxes, tourist areas (places with a high number of visitors as compared to full-time residents) are allowed to impose a “resort area tax” on goods and services sold within the resort.

These taxes are meant to avoid overburdening the residents of tourist areas with individual expenses incurred due to the impact of tourists on the infrastructure. The good side of the higher taxes is that resort communities tend to keep their infrastructure up to date. They work hard to put on a good face for visitors, so you will likely get to enjoy clean streets, no potholes, smooth sidewalks, and fresh flower baskets or seasonal decorations on the main streets.

Normal home-maintenance expenses are necessary for any home, of course. Many homes in resorts are part of planned developments, in which case the homeowner must also pay periodic dues and assessments, in return for which the common areas around your place will be maintained. These ongoing expenses are necessary even if the home is only occasionally occupied. A part-time homeowner might also need to hire an on-site manager to handle ongoing maintenance. Some part-time owners also choose to hire a property manager to ensure that their vacation home is cleaned, stocked with groceries, and heated upon their arrival.

Con #3: The Area Is Less Appealing During Off- Seasons and Extreme Weather

While resort living might be just what you’re looking for during peak season, you might find the area unattractive during the off-season. Many resorts have “shoulder seasons,” where the weather is uncooperative and the activities scarce. “Mud season” in the Colorado mountains, for example, means there is no snow for skiing, and the mountain paths are too muddy for pleasurable hiking or biking. And while lying out at the pool at your Arizona condo might be fabulous in December, in August you might avoid going outside for fear of heatstroke.

If you plan on using a resort home part-time, such seasonal fluctuations might be fine. But keep in mind, your expenses will continue while the home is vacant, and the chances of renting it out during the off-season slim.

Even during peak season, weather is an issue worth taking a careful look at. Blizzards, below-zero temps, and black ice can make life in a mountain area hazardous and uncomfortable, while homeowners at beach resorts might suffer from temperature spikes and intolerable swarms of insects.

It’s easy to overlook these issues when looking at a gorgeous home in beautiful weather. It’s wise, therefore, to visit the resort in all seasons before buying, to get a taste of what the area is like in many different conditions. If possible, renting a property in the community and living there awhile before making a purchase is an excellent idea.

Con #4: Getting There Can Be a Hassle

Accessibility can also be an issue with resort areas. A secluded mountain home might seem charming, for example, until you are stranded in it for weeks due to spring flooding or winter snow drifts. Some areas have no airports nearby and require lengthy drives over poor, slick, or windy roads – which get backed up on Fridays and holiday weekends. Resort homes on islands, of course, must be accessed by expensive flights or boat journeys.

Reaching these areas once a year might not be a big deal -- but owning a home in an inaccessible place is a different story.

Recouping Expenses by Renting Your Resort Home

If a resort home is used only as a vacation home, an owner might expect to recoup some expenses by renting it out. While this can be a great solution, renting can also pose challenges.

Some developments will not allow its owners to use the property as a rental. Renting might also give rise to tax issues (for example, you might have to pay a lodging tax if you rent out your home, or renting the home might jeopardize a future 1041 exchange).

Finding reliable renters is always an iffy proposition. You will likely need to hire a good rental management agency to coordinate the rentals and check out potential renters. This expense, of course, takes a piece of your profits. Also, the times you are most likely to rent the property successfully are usually the times you’d wish to use the home yourself (such as holidays and during peak seasons).

Owning a home in a resort community definitely has both benefits and drawbacks. Before you buy, take the time to look into the area and thoroughly weigh the pros and cons. Enlist the help of real estate professionals in the area to show you around and answer your questions. By doing your research before buying, you’ll increase the chances that the benefits will outweigh any problems and you can spend your future enjoying resort living.

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