Summers at the shore are the stuff of fairytales here in South Jersey. Everyone has memories created at Grandma’s place in [insert your favorite shore town here]. Debates rage about which town has the best beach, pizza, and boardwalk.
But alongside nostalgic considerations, the value of beach properties have skyrocketed and Hurricane Sandy further hastened the turnover from blue collar owners with simple bungalows to multimillion dollar homes and multi-unit rental properties.
So deciding to buy a place of your own with your extended family rather than rent the same old place for a couple of weeks it seems to be a sound decision, right?
Maybe, but consider a few things first. Real estate is a significant investment. You need to consider more than proximity to your favorite beach. As an owner it is also your responsibility to consider any number of things, but the big two are costs and property use.
What are the insurance needs of the property? How will they be divided? How will household expenses, things like cleaning, landscaping and upkeep, be paid for? Who pays the bills every month? How will they collect the money from the rest of the property owners?
Is it exclusively a family home or is a part-time rental? Who will use the property? When will they use it? What happens when ownership changes occur? What if someone dies, gets divorces, cannot afford their share of the expenses, or moves away and no longer wants their share? What is I become estranged from the family and want out 5 years from now?
Things may be rosy now, but there will be disputes whether it be over how often the grass should be cut or that someone is not paying their share of the mortgage. So what to do?
Sometimes the vacation home fairytales quickly and easily become expensive, emotional nightmares. There is nothing that will rip a family apart like a real estate dispute.
So should you head for the hills when your family has a chance to buy your favorite rental property? Of course not! But be realistic, and do it right from the beginning.