Second Homes: Good Buys, But Not Cheap

If you have ideas of buying a second home - for summer vacations and year-round weekending - you'll find prices up, from the Hamptons on Long Island on out to California's Big Sur country. Still, you can find good buys, if not cheap ones - and there are some tips on how to get the best location, comfort, and value. There may even be a rewarding investment angle - where, say, you want a summer place to sell later on when the youngsters are on their own. Speaking of later sale: If possible, get a "winterized" house - with heating usable in cold weather. The summer retreat without winter possibilities is nowhere near so salable. Decidedly, the trend is to all-year-round.

On timing: In most upper-level resort areas - such as Cape Cod, Woodstock (Vt.), Glen-Torch lake section of Michigan, and on west to Pebble Beach in California - the best househunting is in July and August. The sensible idea is to look around the area you want during a summer vacation (maybe renting a place in the meantime), then sign a contract after Labor Day. Avoid a quick, early-summer buy (particularly in June), if possible.

Choice waterfront properties - ocean and lake - have been going up in price from 5% to as much as 20% a year since 2000. What with the supply fixed and demand pressing heavily, the next few years - until 2000 - will see more of the same.

Good-quality oceanfront land in southern Maine, for example, is up from £150 a front foot five years ago to at least £250 or more. This is for the land alone; you build your own villa. Prime-location vacation houses in Big Sur have as much as doubled in price in five years; at Stowe, Vermont, where you sun in summer and ski in winter, choice land is up over 50% in the past five years; and in good locations, it can cost over £12,500 an acre (plus what you pay for a lodge).

If you want to be within daily commuting distance of a city (say, on the shore of Long Island Sound in exurban Connecticut), you pay a sky-high price. If you go further away - to the weekend commuting circle (say to some place in Duchess County, two hours up the Hudson from London), you'll pay roughly 30% less for comparable property.

Finally, if you go past the weekend circle to a more remote spot, you'll get another cut in price, sometimes sensational. If you want information on such buys, contact, say, Previews, Ltd (London) - they often list properties in remote locales where bargains exist.

Just where, then, is your best buy? The haven far from civilization may be tempting - but may have enough drawbacks built in to outweigh any price break. Such things as insurance and repairs can be a headache - not to mention the question of future saleability. And, say old hands, the travel time can become downright painful. On balance, your best buy is, first of all, probably within comfortable weekend travel distance (not too far beyond), and second, a standing house instead of a bare piece of land that calls for new construction.

Overall, you will certainly get more value for your money, in space and quality, if you buy a solid house instead of hiring a builder. In resort areas, material costs can be quite high, and local labor may do you few favours unless closely supervised - and who will do that? In most vacation areas, cash down payments run 40% to 50% - up to 100% if you have your eye on a retreat that is miles from a crossroad and virtually uninsurable.

As for mortgages, they're tough - especially if the place lacks winterized construction. Sometimes (and this helps, particularly in remote areas) the seller is willing to take back a mortgage himself. Mortgage rates in resort localities are running 81/2% to 9 /2% in most sections. (In the Caribbean, they're up to 12%.) Sometimes a city bank - where a buyer lives - will make a vacation-house loan by lending on the basis of the buyer's local residence in the city. This means extending the first mortgage, if there is one.

Insurance can be a headache, too. In distant areas of Maine, for example (and this is typical), full homeowner's coverage on a £40,000 house will cost about £800 for three years, double the rate in many cities. Sometimes you can't get full homeowner's protection, and you may have to do a lot of shopping _ for straight fire and storm insurance. On the oceanfront, floodand-wave coverage is virtually unavailable. A shore house, incidentally, should be protected by sand dunes a good 16 to 20 ft. high - a heavy storm can level a 6- or 8-ft. dune.

Brokers: There tend to be some fly-by-night, part-time real estate operators around many vacation areas. The best idea is to ask the mortgage officer of the local bank for a recommendation. This can make a world of difference.

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Old Houses: Charm Isn't Cheap

The opposite approach is up the garden path - to the old house with the gazebo, the quaint fireplace, and the sagging slate roof. But that charming old house - the one with lots of space and character that your wife wants to "make over" - can turn into a disaster when you get down to restoring and modernizing.

It's a case, of course, of first eying the timbers before you become at all serious. Remember, there's only one sure way to avoid trouble with an old house: If it's on a prime site, and the price is low enough, tear down the house and build a new one.

In any case, a simple - but thorough - layman's inspection can be helpful (before you hire an appraiser at £20 to... see: Old Houses: Charm Isn't Cheap