Costa BajaThis is great news — I am a big fan of 3rd Home, and an even bigger fan now to hear who all is joining the vacation home party: Tucker’s Point Club in Bermuda, The Deer Valley Club and– Costa Baja in La Paz, Mexico, one of my favorite Cabo area getaways. In fact, I am hoping to get away to Costa Baja later this year for an update. Here is my full report on the opening. 3RD Home is a pioneering travel club for people who own luxury second home properties… and the best way to turn your second home into a THIRD!

NASHVILLE–(BUSINESS WIRE)–3RD HOME, the pioneering reciprocal travel club for luxury second homeowners, continues to set the standard among luxury home exchange programs with the announcement of three new affiliates. Joining 3RD HOME’s world-class roster are Tucker’s Point Club – one of the finest resort communities in the world, set on 200 acres of rolling hillsides in Tucker’s Town, Bermuda, The Deer Valley Club, a private residence club in a beautiful true ski-in/ski-out location on the slopes of Deer Valley Resort in Park City, Utah, and CostaBaja, “A Whole World in One Place” on the Sea of Cortez with extraordinary vacation homes, international Marina and Beach Club, and a Gary Player Signature Golf Course. Through the affiliate program, 3RD HOME members are granted access to five-star residence clubs and resort experiences.

“This is an exceptional opportunity for our owners to travel around the world and take advantage of 3RD HOME’s impressive portfolio of vacation properties”

“We are committed to increasing the variety of luxury travel opportunities for our members, and providing a valued service to the most prestigious residence clubs. Our partnerships with these top properties will allow us to offer 3RD HOME members an experience like no other, and increase the utility of owning at these great communities,” said 3RD HOME CEO / Founder, Wade Shealy. “We are certain that Tucker’s Point Club, The Deer Valley Club and CostaBaja will be popular destinations for our existing members. We are excited to work with these new partners and welcome their current owners to join 3RD HOME.”

“This is an exceptional opportunity for our owners to travel around the world and take advantage of 3RD HOME’s impressive portfolio of vacation properties,” said Tom Sleeter, Director of Sales & Marketing at Tucker’s Point. “It’s an ideal arrangement where everybody wins.”

Designed exclusively for luxury second homeowners, 3RD HOME provides a level of value that cannot be obtained through any other home exchange program or destination club. 3RD HOME’s partnerships with over 20 world renowned residence clubs and developments, ranging from the Trump International Hotel & Tower in New York City to Esperanza, an Auberge Resort in Cabo San Lucas, allow 3RD HOME members to exchange their homes for stays at full-service properties. 3RD HOME memberships are endorsed to affiliate property owners as well, which enables them to exchange unused time at their residences to access over 1,500 vacation homes and villas in the 3RD HOME portfolio.

Created to fill a need expressed by second homeowners, 3RD HOME affords members a safe and trustworthy way to “expand” the use of their second homes without the hassles of renting. By depositing weeks in their second homes into the club, members earn 3RD HOME keys, which can be used as currency to immediately reserve a stay in any other available property. To become a member of 3RD HOME or to learn more about its affiliate program, please visit www.3rdhome.com or www.3rdhome.com/affiliates.

About 3RD HOME

3RD HOME is a pioneering private club for the owners of luxury second homes. Featuring over 1,500 properties in 68 countries, with an average value of $2.25 million, and endorsements from iconic residential developments, 3RD HOME enables second homeowners to travel the world and stay in premier properties without the expense of renting. Unlike traditional home exchanges, 3RD HOME does not require a direct or simultaneous exchange with another member. By making available weeks of time in their own second home for other members’ use, members earn 3RD HOME Keys that can be used as currency to immediately reserve a stay at other 3RD HOME properties. Prospective members are pre-screened for home quality and members provide unbiased ratings and feedback on their host and guest experiences to ensure the highest quality of members and their residences. 3RD HOME facilitates a reliable and safe exchange process through a seamless internet platform, providing sophisticated travelers with unmatched experiences. To learn more, visit www.3RDHOME.com.

ABOUT TUCKER’S POINT CLUB

Tuckers Point BermudaTucker’s Point is Bermuda’s premier resort, golf club and residential community. Offerings include partial ownership Residence Clubs, as well as Whole Ownership Communities, that include villas, town homes, custom homes and lots. The centerpiece of the resort is Rosewood Tucker’s Point Hotel & Spa; amenities include a full-service Spa, Fitness Centre, Dive & Watersports Centre, and The Point Restaurant. The private Tucker’s Point Club includes a championship golf course and clubhouse, lighted Har-Tru clay tennis courts, and a spectacular beach club with Bermuda’s largest private, pink-sand beach.

ABOUT THE DEER VALLEY CLUB

Deer Valley ClubThe Deer Valley Club elevates the value of ski vacation home ownership by freeing you from the hassles and high cost of sole property ownership. We believe that vacations are meant to be enjoyed, whether that means playing hard on the mountain, or relaxing deeply on the terrace. However you define the perfect vacation, we’re certain it shouldn’t include maintenance, mundane errands or schlepping ski gear. Taking care of all upkeep, transportation and even grocery shopping is our job. Your job is to enjoy your vacation!

The Deer Valley Club is the world’s original luxury private residence club; our founders pioneered an ownership concept that has become a proven and well-respected option for savvy real estate investors all across the planet. What’s more, we are the only private residence club offering direct ski-in/ski-out access to Deer Valley Resort’s renowned slopes.

 

ABOUT COSTABAJA

vistamarbeach04-low-res.jpgcosta bajaCostaBaja is the ultimate destination in La Paz. It has everything desired in an international getaway, starting with its enticing 5-star Resort & Spa, and culminating in an inspiring collection of vacation homes and real estate opportunities. CostaBaja is thoughtfully master-planned as an all-inclusive resort whose pleasures extend from the world-class Marina and Beach Club, to fine dining and shopping, to the Gary Player Signature Course at the CostaBaja Golf Club. CostaBaja has everything you could want in an international escape, so you never need to leave it. But, it offers even more because it has La Paz. With its quiet, white sand beaches, its bay after aqua bay open to discovery, and its safe and friendly community, La Paz is a secret adventure with all the conveniences and culture of an international destination.

 

There has never been a better time to buy a second home. I am even watching my spending these days, eyeing fractional ownership if it has all the right locations. We are having a guest post soon from a fractional ownership expert to explain the do’s and don’ts. The problem is not buying, as we know, it’s getting financing. We recently re-financed our lot in the Hill Country at Walnut Springs, no thanks to Wells Fargo  and were told to basically forget it. No one wants to finance land without a house on it because there is nothing to sell should you default. And when it comes to raw, open land in the country, things are a lot trickier.

I would strongly suggest that even before you begin looking in the country or lakes or wherever — but really, now, go look — heed this advice from Marcus McCue, Senior Vice President at Guardian Mortgage. By the way, from my own personal experience, I also strongly recommend local mortgage companies FIRST and staying clear of the large banks to avoid headaches, or in the case of Wells Fargo, migraines.

What surprises await new country homeowners?

There are several surprises that can slow down the loan approval process for country homes. For example, most people are not aware that there are special requirements for wells, sewage systems, oil/gas wells or pipelines, power lines, storage tanks, wood-burning stoves and even how close the property is to a landfill. (A landfill!) These factors take on even greater importance if you are considering an FHA or VA loan, both of which have more stringent rules.

You’ll need water tests and possible soil tests and most likely a new survey to make sure that electric lines or gas pipelines aren’t within your easement or will be a certain distance away from the house.

If you are pre-approved for the loan, will you still run into these problems?

It’s possible. Pre-approval is not enough in the case of a rural property because of these property and improvement requirements. The underwriter might decline the loan if the property doesn’t fit its requirements. It is important that the contract state that the deal is contingent on the underwriter accepting the property.

The bottom line is that rural properties will take more time – water and soil tests can take weeks to come in, for example.

Another snag may be in the appraisal process. Since country appraiser cover hundreds of miles of properties, you want to make sure you get someone who is at least familiar with your home the area it is in.

For more specific details, check out this article from Mortgage Currentcy.com, which gives a chart of specific FHA and VA requirements for rural properties – the guidelines followed by most underwriters.

If you have additional questions about your particular situation, feel free to contact Marcus McCue at 972-200-3380, marcusmccue@gmc-inc.com or on facebook.

 

Those of us in real estate know that when the housing market plummets,  vacation places plummet the most. Second homes are most often discretionary purchases you wait on until you feel flush with cash.

Well, get ready. Realtors say second-home buyers are returning to the store,  shopping from Cape Cod to Lake Tahoe. As I told you, nationwide vacation home sales rose 7% in 2011 to 502,000 homes, according to the National Association of Realtors. They made up 11% of total sales in 2011, more than they did in 2010.  And NAR’s spokesman Walter Molony, who I hope to see in Denver next week at NAREE, expects continued momentum.

“We’ve heard positive reports from Las Vegas, Telluride, Col., Lake Tahoe, Naples, Fla., and some areas of California,” he told Investor’s Daily. “We’ve been seeing a little bit of unleashing of pent-up demand.”

Well yes, that plus bargain prices.

But while the number of transactions is increasing, vacation home prices are still not generally appreciating. The healthiest segment of the market is, surprise surprise, upper-end properties: the luxury market.

Neal Hanks, an Asheville, N.C. agent says he is seeing significant increases in sales of homes in excess of $500,000 in the Blue Ridge Mountains.

I hear the Florida market is even tightening up. No Girls Gone Wild, but firming. The recent death of my brother-in-law has me poking into the Naples market, where they own two homes. In nearby Sarasota, Manatee and Charlotte counties, inventory is just 4.7 months, the lowest since 2005.

In Southwest Florida,  broker associate Jennifer Calenda of Michael Saunders & Co., a luxury regional real estate firm affiliated with Ebby Halliday through Luxury Portfolio, says dollar volume sales are up. Prices are not going up, but people are buying about $100,000 over where they were — so folks looking at a $300,000 condo might spring for $400,000. Are people really feeling more flush, more confident, or just sick of depriving themselves?

Some feel people are getting back on their feet, paying off debt, and I think I read that American’s debt levels were decreasing. David Southworth, founder and CEO of Southworth Development, which specializes in upscale vacation-resort communities, says demand is coming back as people get on their feet.

“The second-home market is always a trickle-up type,” he told Investor’s Business Daily. “As the economy gets better that means small business owners start making money again and executives start getting bigger bonuses. And that’s when our customers come back.”

“During the past year, investors have been swooping into the market to take advantage of bargain home prices,” said NAR Chief Economist Lawrence Yun . “Rising rental income easily beat cash sitting in banks as an added inducement.”

The median vacation-home price was $121,300, down 19.1 percent from $150,000 in 2010.

The typical vacation-home buyer was 50 years old, had a median household income of $88,600 and purchased a property that was a median distance of 305 miles from the primary residence; 35 percent of vacation homes were within 100 miles and 37 percent were more than 500 miles. Buyers plan to own their recreational property for a median of 10 years.

Eighty-two percent of vacation-home buyers said the primary reason for buying was to use the property themselves for vacations, or as a family retreat. Thirty percent plan to use the property as a primary residence in the future, while only 22 percent plan to rent to others.

Forty-two percent of vacation homes purchased last year were in the South, 30 percent in the West, 15 percent in the Northeast and 12 percent in the Midwest; Only 1 percent were located outside of the U.S.

They’re not all back. Southworth recently bought some communities on the cheap after the real estate bubble burst: Creighton Farms in Virginia horse country and most recently Willowbend in Cape Cod. Willowbend is doing the best, because of 8 million in metro Boston who can drive there. Most second home owners prefer to drive to their vacation homes, on average about 4 hours, but most often one or two.

Next week, I’ll hear more about Longcove at Cedar Creek Lake east of Dallas: 45 minutes east of Dallas.

The segment doing the best is the high end of the vacation market, this according to Brent Herrington, senior vice president of luxury developer DMB Associates.

“Inventory is much scarcer in the most desirable locations,” he said. “Prices are firming … we’re getting back to a world of multiple offers.”

Those amazing deals in the tops spots of the Hamptons, Martha’s Vineyard, Aspen and Vail peaked in hit in 2010-11. If you didn’t do it then, or are not quite in that league, look for the secondary markets — beachfront but not the name-drop locations.

After a few decades of recession, Palm Springs is becoming a hot second home market, beating out Santa Fe, say some realtors. And the developers are there to give buyers what they want: sun and out here, golf.

“We find our buyers appreciate all the things that Palm Springs and Indian Wells has to offer – the relaxed, resort atmosphere, no traffic concerns, friendly service, warm winters, incredible views and an abundance of outdoor activities, “ says Bill Bone, CEO and Founder of Sunrise Company, developer of Toscana, a golf community development in Indian Wells.

There is golf of course but also hiking, biking, farmer’s markets, as well as great shopping, dining, entertainment, the arts and medical facilities.

“Members have so much fun here, they call it “Camp Toscana”, says Bone. “We are very pleased with our sales results this year: have been 34 homes sold at Toscana, more than $59,000,000 in total sales.”

 

Palm Springs is within close proximity to sooo many Cali locales – less than 2 hours from LA, Laguna, San Diego, Palm Springs is brimming with mid century architecture, history and development.

“It appeals to people who really value properties of that era, and the new boutique hotels and restaurants keep things fun and interesting,” say Palm Springs agents Mark Godson and James Dalton Utsey. “The evolution of our downtown strip continues with the Fashion Plaza being rebuilt as a pedestrian friendly shopping and gathering place.”

 

Like many areas in California, Palm Springs was not spared during the housing bust, but values are beginning to inch up. Don’t have to worry about hurricanes here. Look carefully there are deals to be found.

 

Many consumers buy thinking they can rent out the home for cash flow and potential income, and they can. Vacation home rental listings are up at the website HomeAway. It had 433,000 listings in 2009, but 700,0000 listings now, says its vice president, Jon Gray.

Buyers are stirring, multiple offers are being reported, but there are no indications of appreciation. In some areas, prices are still falling. Do not be afraid to make an offer below asking: U.S. vacation home asking prices dropped 1.7% year over year in the 12 months ending in April, as overall listing prices fell 0.2%.

I do not advise buying a vacation home for pure appreciation. Just look for family enjoyment and maybe a place to rent out.

Still, some areas are seeing a tweak upwards when the distressed properties are all sold out. And demographics may be favorable for long term growth in vacation homes, with the average buyer age 50. There are 42 million people 50 to 59, right behind them are 43.5 million 40 to 49. Then there are 40.2 million people 30 to 39. These people grew up with vacation homes as common as swingsets and may follow their parents’ footsteps in buying.

 

The Texas Rangers are going to be world champs for the second year in a row, I feel it in my bones! But Rafael Palmeiro, the Rangers former slugger turned real estate developer, might be wishing he could get back into the game and out of real estate. Palmeiro is now asking creditors in his bankruptcy case (says the Fort Worth Star Telegram) to give him five years to sell the 200 acres of undeveloped land near Grapevine Mills mall he had planned for a mixed-used development called Gardens of Grapevine.

Palmeiro’s creditors are owed more than $40 million, and $10 million of that is owed to Palmeiro himself, the “skin” he apparently put into the deal which has Branch Banking & Trust listed as the largest creditor at $19 million. According to the Fort Worth Star Telegram, Palmeiro negotiated loan extensions with three lenders last year, but in March, BB&T played hardball:

“BB&T “abruptly demanded $8 million cash to extend again,” and posted the property for foreclosure, pushing the development into bankruptcy, court filings said.”

Wow, that’s mean. Palmeiro and his wife, Mary Lynne, live in Colleyville. Stay tuned for the deets on that home. But they also own a home in in Pebble Beach, Calif., worth at least $10.5 million, they claim, which they say they will sell. (Hey, I know a great Realtor out there.) The Star-Telegram says they plan to make $2.5 million from the sale of the Pebble Beach property to make interest payments on notes until the Grapevine property, which fronts Texas 121 and Farm Road 2499, sells, hence the request for five years until the market turns around.

I did some digging in Pebble Beach, where I spent a week this summer at Concours D’Elegance. My sources tell me the Palmeiro Pebble pad is about 6,700 square feet, a stunning 1920′s Mediterranean complete with a wine cellar, three car garage, pool and guest house. It was originally priced at more than $12 million, but they snagged it in 2008 for $8,500,000. It may well be worth $10.5 million, but how do they expect to sell it in this market — and California real estate is not exactly flying off the shelves — for more than they paid in 2008? That’s a real head-scratcher.

Of course, my sources there do tell me that while the summer in Pebble was slower than my golf game, things have picked up.

Palmeiro is working to obtain liquidity: Gardens of Grapevine is under contract to sell 17 acres to Lincoln Property Co. for $6.9 million in February. And Lincoln has an option for another 17 acres. With luck and any sort of market turn-around, he could sell 192 acres to net as much as $46.3 million.

And more good news: a recent appraisal put the land’s market value at $55.2 million, up $2 million from an appraisal done a year ago, court filings said, as reported in the Fort Worth Star Telegram. Very encouraging, indeed.

Cinnamon Shore

This may be a great time to BUY a second home, but are banks, who make it hard enough to finance your primary residence, cooperating? The answer is yes, if you have good credit and a hefty down payment. But I have heard so many conflicting stories on the nuances of getting a second home loan, I decided to consult broker extraordinaire Marcus McCue of Guardian Mortgage. Is it true, for example,  that the home has to be a certain distance away, and that some banks would rather eat a Listeria-laced cantaloupe than make a second home loan. Raw land? Impossible,  Wells Fargo told me — too many underwater mortgages. So I needed to bring in the big gun, aka Marcus. He tells us the biggest challenge is defining just what a second home is. Here’s a secret: even Real Estate agents get confused:

It seems obvious what it means when you tell your REALTOR® or lender you’re buying a second home, right? If only that were true! Many surprised homebuyers have gotten part-way through the loan process and been denied before they discovered that their home cannot be categorized as a second home and cannot be financed as a second home due to the occupancy requirements for second homes.

1. The second home must be located a reasonable distance away from the borrower’s principal residence.

What is a “reasonable distance” can be up to interpretation. For example, if the property is a lake house or beach house, the property may be located less than an hour away from the borrower’s primary residence and still be acceptable to the underwriter as a second home. However, if you live in Dallas and are buying a second home in McKinney, the originator or their underwriter is likely to deny the loan as a second home and will require the loan to be processed and closed as an investment property.

2. It must be occupied by the borrower for some portion of the year

If the property is a second home, then this means the property will be occupied by the borrower for some portion of the year. This could be seasonal for those properties located in ski or beach areas, numerous times per month like weekend visits to a lake house, or periodically during the year like a home grandparents purchase near their grandchildren.

3. Financing is restricted to one-unit properties only

A duplex or other multi-unit property is categorized an investment property by conventional guidelines even if you live in it part of the year. The owner would be occupying only one of those units – with the other units leased to tenants – the financing on the entire property would be categorized as an investment.

4. The property must be suitable for year-round occupancy

A property that is only functional in one season like a hunting cabin with no heat will be denied.

5. The borrower must have exclusive control of the property (no timeshare or split ownership situations)

6. The property must not be a rental property or a timeshare arrangement

7. The property cannot be subject to any agreements that give a management firm control over the occupancy of the property.

Basically, see point #6. If you have an agreement where a management firm controls the occupancy, then the borrower does not have exclusive control of the property and the property is likely to be rented to tenants during the year.

Question: Does this mean you can never rent out your beach house?

The issue here is intent. The intent at the time of closing needs to be that the property will be owner-occupied and not rented. If the property is rented after closing or years later, but the borrower occupies the property themselves at some time of each year, then the loan is not fraudulent.

Question: What if you want to buy a house for your child to live in while in college?

In this scenario, the property is an investment property and not a second home. Your children are not you … so if they occupy it is not owner-occupied. There are very limited and specific scenarios where properties can be financed for family members as owner-occupied properties, but these are limited to disabled children and elderly parent situations.

If a parent is buying a property in a college town because their child is attending the college, then their intent needs to be that they will be occupying this property themselves when they visit the child in college: Not that the child will live as the occupant and they will have a room to stay in during visits.

Question: If you’ve determined that your home is not a second home, what are your financing options?

The options are primary residence, second home or investment property. If a property is not your primary residence and not a second home, then the only other option is investment property. Both primary residence and second home properties are in the “owner occupied” category. If the property is not owner occupied, then it is investment. Investment properties generally require more of a down payment and do not qualify for the same tax benefits as an owner-occupied home.

If you have additional questions about your particular mortgage financing situation, feel free to contact Marcus McCue at (214) 473-7944, marcusmccue@gmc-inc.com or find him on Facebook. Or email me and I’ll hook you up!