BUYING A PROPERTY IN A LIFESTYLE LOCATION? CONDO, TOWNHOME OR SINGLE FAMILY RESIDENCE?
In many articles written by yours truly, I do throw the word ‘lifestyle’ around like beads at a Fat Tuesday parade in the French Quarter.
But what exactly do I mean by a ‘lifestyle property? What are the choices of lifestyle property and, even more importantly, where are you going to buy?
Well, let’s say there are options.
Lifestyle properties provide an environment where you can enjoy living with those you wish to create and share special memories within a backdrop that enhances life.
Lifestyle has been practically my sole focus since I entered the business in mid-2000, where I still specialize. A lifestyle property can mean different things to different people, which is why a one-size-fits-all approach to help everyone rarely works.
It could be everything from a small condo used as a vacation property a block from the beach, which allows you to visit every summer and rent it out the rest of the year. Or, it could be a luxury 50-acre homestead with a river that runs wild, and the wildlife roams free. Or something as quaint as a small cabin in the forest on the edge of a pristine lake.
The main point here is that there is no ‘wrong’ place if you love it. Properties help to deliver the lifestyle and emotional needs of people – and these can be endless.
Designing your lifestyle is about more than owning a home with 2.3 kids and a white picket fence next to neighbors who know too much about us. The American dream taught by our parents has changed due to changing values amid the frenetic pace of life.
Over the past several years, many Americans have been acting upon the realization that they need change. Now they want to avoid 90-minute commutes to a job 5 miles away. Recently it has accelerated in the environment of a pandemic.
Since 2020, people who want to escape States with overbearing mandates, exorbitant expenses, and crowded living, to families who have no issue with the new status quo but require a second home to decompress. There is no wrong choice in lifestyle real estate if it makes you happy.
The following are the three main types of properties available to you: a second home, vacation property, or single family homes in a lifestyle location.
I’ve broken this down into your three basic choices (excluding ranches, which you can read about here)
CONDOMINIUMS (CONDO)
Condos range from studio-sized rooms in a small resort town to the lavish exuberance of a condo-tel chain, such as St. Regis and Montage Resorts. They are usually located right in the thick of all the action or just off the beaten track.
Typically, in condos, people live above, below, and to the side of each other. So neighbors, good and bad, long-term residents and short-term vacationers, surround you along with the noise they create.
There is a universal entrance and often unassigned parking, which is first-come, first-serve. Top corner floor units tend to sell for a premium because of fewer neighbors, less noise, more windows, more light, and often better views.
One of the more beneficial reasons for owning a condo is the simplicity of locking it up and walking away until your return. Likewise, if renting, there are businesses that can take care of billing and interior maintenance. However, there is a potential love/hate relationship with one part of the condo experience: the HOA (Home Owner’s Association aka COA for Condo Owners Association)
This can be the bane of existence for some condo owners, but the HOA can cover many of the associated headaches for the type of multi-stack complex that most condos are part of. While everything inside the condo walls is the owner’s responsibility, the HOA usually covers:
- All common area upkeep
- All exteriors of the building
- Common area insurance and taxes
- Any additional amenities, such as pools, gyms, etc.
- Maybe water, sewer, trash collection, and basic cable, etc.
However, this comes at a price and should be factored into the purchase price and the running costs. I know of some HOA’s that charge a bare minimum (limited social space or amenities) of $200 per month, while luxury condo-hotel complexes charge $1500 plus per month and offer four and five-star conveniences. It is usually calculated by the square footage of each unit.
Any issues from pests to exterior paintwork can be the HOA’s responsibility if assigned, so there is little concern.
Here’s a little side note: if you are a dog owner, be sure that you are allowed to have them. Unfortunately, some condos restrict owners from having any dogs, limiting the dog breeds, how many and size. Or, HOA’s may allow dogs for the owner, but not the renter. This should be part of your pro and con list if a concern.
Rentals are the biggest challenge in some locations, especially if the condo complex is close to residential communities. If using a condo as a vacation property with occasional personal use, always check for rental restrictions before finalizing the purchase. For example, the city ordinance may state that you are zoned for nightly rentals in a resort town, but the local HOA does not allow it. Unfortunately, the COA/HOA has precedent.
It’s all part of the Due Diligence required.
TOWNHOMES
The only meaningful differences between a townhome and a condo are that:
- Townhomes are horizontal in development, while condos are vertical.
- Townhomes have separate entrances and a private garage, with one neighbor on each side, unless an end unit.
End units are generally the best. The HOA rules are usually similar to those for condominiums: primarily, everything outside of the home’s walls is the HOA’s responsibility.
However, some HOAs in a townhome development limit what they cover, depending on construction materials and how the master plan is created. For example, some HOA’s do not cover roofs or exterior walls but do communal areas. The concept here is you pay less per month but cover those issues as a homeowner would. Therefore, carefully check the HOA rules and the CC&R’s (Covenants, Conditions & Restrictions) before purchasing to know who is responsible and for what.
In addition, check for any restrictions on earning rental income. For example, some locations may not allow short-term rentals but will approve long-term, such as a minimum of thirty days to six months. However, similar to condominiums, the HOA may not allow it at all.
SINGLE FAMILY RESIDENCE
There are several items to touch upon for homes. First, it is not a one size fits all from open communities with no HOA’s to private country clubs and gated estate communities that can benefit from having them.
Ultimately, HOA’s in residential communities are created to provide services to keep the interests of homeowners, such as snow plowing or road resurfacing, etc. Secondly, it is to ensure everything is followed to the letter to maintain home and community valuations.
If you like to live outside the rules, then HOA’s may be tough to adhere too as there are some ridiculous things an HOA can require you to follow. Some of the rules are; if you are having a BBQ, you are not allowed to use wood or coal. If you are an independent entrepreneur that owns a business, you are not allowed to have any vehicles advertising what you do, especially if a trade. There are a ton of silly things. However, I do understand no boats, RV’s, trailers, etc., in higher-end locations.
Mind you, as part of the due diligence on your purchase; you will likely have to sign off on the CCR’s, HOA documentation, and the minutes of the latest meeting to prove you understand what is required as a homeowner.
Another consideration, if you are buying or investing in a vacation home or decide to rent out your second home for rentals, the HOA may need to approve the tenants. This can be very intrusive down to the HOA, requiring information about jobs, income, and even marital status. However, as long as the information gathered does not conflict with federal statutes, it can be part of the HOA guidelines for tenants.
Think that is bad? If you are looking to sell your property eventually, the HOA can determine that the new buyers do not pass their requirement to be a part of the community and force the contract to be canceled. I have seen a few contracts go south because of this. Even worse, what if you are using the sale of this property to use to purchase another….you would have to cancel the purchase.
It can get absurd. So once again, understand who you are, what type of lifestyle and freedoms you want or are willing to let go of to live within a particular kind of community.
From a mountain cabin to a ski-in/ski-out slope-side estate, from a palatial mansion in the Hamptons or a coastal cottage in Oregon, everyone has a different concept of their ideal lifestyle and a budget to make it happen. HOA’s can be a positive part of the development, but it can become contentious if mishandled from inside power trips from overzealous resident board members.
OK, let’s talk about some happy stuff.
One common theme in a lifestyle location is ‘supply and demand.’ As there is less land to develop, the properties in the best areas are nearly always acquired for a higher price.
If you are looking for a home, purchasing a less expensive property further out of town, only a few minutes away, can bring potentially much bigger rewards than appreciation, including freedom and privacy.
The same story applies to almost any small, flourishing town in the U.S. We have seen prices rise everywhere in lifestyle locations since early 2020. The Great Migration.
People are purchasing in residential neighborhoods, offering exorbitant prices to sellers. Many homes here sit in ‘pockets’ that provide incredible views of the ski resorts, golf courses, coastlines, and townships.
These are often half or even a third the price per square foot than an in-town location, but the real difference is that it does feel like a home away from home.
You have the views, environment, convenience, and comfort away from the tourist destination hotspots. And since it’s less expensive, you may not have to rent out to pay the mortgage.
So it can pay to search just outside of your core area, as you can find stunning locations that provide something more than just convenience: home comforts without the premium or highly structured HOA’s.
Andrew Storms is a 17-year expert in Lifestyle Real Estate. After 8 years with the #1 Engel & Volkers office in the world, he has dedicated the last 5 years to building Kealink.com. A published author of “Castle to Kingdom” and has been featured on HGTV, USA Today, Wealth TV, and House Hunters International.