How to Buy Luxury Resort Property
The Eight Most Important Items to Consider
By George R. Harvey, Jr.

The second home market is booming for many reasons, however, the primary reason is that 10,000 baby boomers are turning sixty everyday and are inheriting $9 trillion dollars over the next fifteen years. Buying luxury resort property is quite different from investing in the traditional homes and condominium market. Here are eight tips to consider when exploring this attractive market.

1. Think location. Real estate is famously about location, location, location. If luxury resort property is going to be your special getaway, get specific about where you want to buy. For convenience sake, it makes sense to consider resorts that are closer to your primary home. But keep in mind, the resorts that are easily accessible to the masses are often overrun with tourists ? and that might not fit your wants. Destination resorts, which are typically a little harder to reach, are more private and personal.

2. Consider types of property. After choosing the location, consider the kind of real estate you want: a home, a condominium, a ranch, a fractional ownership, a club membership or vacant land to build your own dream home. All possess unique advantages and disadvantages. Ask your broker which type has been the best investment in your chosen market. While resort real estate has been an exceptionally good investment for several years, potential return should not be your primary concern. Ultimately, you´re buying resort property because it and its attendant recreation and cultural offerings can bring your family pleasure. Decide what kind of experience you want, and consider it a bonus if you do well financially.

3. Get online. The internet is a valuable tool, particularly when you´re beginning to research potential locations and types of property. It´s is helpful to take a trip through cyberspace before you ever contact a real estate broker or buy plane tickets. A good place to start is with chambers of commerce and real estate brokerage websites in your locations of interest. While the internet won´t allow you to experience the subtle nuances of a resort, it is an excellent way to get background information and to focus your search before you ever arrive. It is also helpful to look in the county records for the names of people who have bought homes in the area in the past two years. You might consider giving them a call to see what an objective, relatively new resident has to say about the area.

4. Select agents with care. If you´ve worked with a real estate broker in your home area, ask him or her to refer you to a broker in the resort area you´re interested in. Real estate brokers often have extensive networks and know who´s good in niche markets, such as resort properties. Generally, you want a broker with at least five years of experience, who has continuous education past basic entry level of licensing, and proven negotiating skills. For the best experience, make sure to choose a buyer´s agent who represents your interests, not a seller´s agent whose professional responsibility lies with the seller. Interview at least three brokers, checking out their references in the process. And don´t buy into the mistaken idea that negotiating a lower commission or fee will save you money. Hiring a real estate broker is just like hiring a doctor or a lawyer ? you want the best, not the cheapest. The superior negotiating skills of good brokers can save you much more money than any reduced commission that you might bargain for. (A note on buying international property. If you want to buy resort property in another country, hire a broker who has international connections. The best brokers network with the International Real Estate Federation or are a Certified International Property Specialist, meaning they are extensively trained and have developed extensive international networks with the top brokers throughout the world. The customs laws and rules vary greatly from country to country, so it is imperative that you´re working with reliable experts in your chosen country and market.)

5. Understand pricing dynamics. When a property piques your interest, find out how long it has been on the market and what the average discount, if any, from asking price to sales price has been for the last six to 12 months. Real estate prices are about supply and demand, so determine whether supply of the property has been increasing or decreasing. Also ask your broker if there are any new major developments that would add significant supply of product competing with yours that might be coming on the market in the near future. (A note on brokers: If you hire a broker who´s working for you as a buyer´s agent, that broker should seek out all seller motivations as well as the unique assets and liabilities for the property you´re considering.) Finally, keep your emotions in check. If you find what appears to be the perfect property, remind yourself that there´s no such thing. Perfection only exists in the buyer´s mind ? for a short period of time. Initially, approach each potential resort property with an investment mindset. In other words, evaluate it as if you were going to have to sell it again after a certain period of time. This will help you choose a property that has broad appeal and potential to move in the marketplace if you ever decide to resell it.

6. Choose local financing. Good mortgage brokers understand the nuances of the local real estate market, so don´t fall into the trap of using a mortgage broker located in city of your primary residence. In order to get business, the local brokers may promise clients they can finance in a resort area where they have no experience. When mortgage lenders and their underwriters determine the risk involved in lending you money they will not only analyze you but the market and individual specific property as well. Experience is important, so choose a seasoned mortgage broker with at least a five-year track record in your resort market area. Again, ask for references and check them out.

7. Consider tax benefits. Resort property can offer tax benefits, but it takes the advice of experts such as professional exchangers, CPAs and your trusted personal tax consultant to ensure that you enjoy the benefits. Get expert input on 1031 tax exchanges, primary residence capital gains exclusions and the conversion of one of these to the other and how it affects you and your tax plan. You can even buy resort property in your IRA or Keogh plan, but again these sophisticated deals require the solid, informed advice of experienced tax professionals.

8. Know property management options. To maximize your enjoyment and minimize your responsibilities, you might want to hire a property management company to look after your new investment. If so, you´ll want to determine whether a long-term or short-term program is best. Short-term generally means nightly or weekly rentals, while long-term usually means six to 12 months out of the year. Ask your broker to recommend at least two to three management companies and interview each one. Learn what the fees are, get references, and don´t sign up for anything more than a one-year term. Why? You need to get to know the management company before entering into a long-term relationship.

There you have it. Buying luxury resort property is not as difficult as you might have imagined, especially when you do your homework. And moreover, buying domestic or international resort property is fun and exciting. Plus, it can be financially rewarding. Today´s market offers an unprecedented opportunity to explore mountain, lake and beach resorts. Just remember, enjoy the hunt because it can take you to some remarkably beautiful places. Best of luck as you search for your perfect getaway.

George R. Harvey, Jr. is an Accredited Buyer Representative, Certified International Property Specialist, Council of Residential Specialist, Graduate of Realtor Institute, Masters of Real Estate.