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Financing Vacation Homes and Staging Your Home to Sell

We had Travis Whitford from WJ Bradley, Mindy Frost from RE/MAX Advantage Plus, and Mia Erickson, Kevin Quagliano, and Jayson Andrea from Alexander’s Mobility Services join us this week.  The first topic of discussion was some facts about vacation homes and how to finance them.  Travis Whitford began with some interesting statistics.  The median income for people buying vacation homes is $99,000, the average age is 47 years old, and the average price is $211,000.  Most people are buying these properties for a family retreat or a future primary residence for retiring.  There are some misconceptions when it comes to financing a second home.  The way it works is you have to qualify for your current home and all your other debts and have a minimum down payment requirement of 10%.  If you have 10% and qualify for everything else, you can buy a cabin.  Typically people purchasing a vacation home will not have a ton of other debts like car loans, boat loans, student loans, etc.  There are also benefits of owning a vacation home which include property appreciation, possible rental opportunities, and tax advantages.

A lot of cabin properties were purchased on a contract for deed and now they are coming up to pay off the contract, the balloon payment. Is that possible for the mortgage?  Travis explains that as long as the contract for deed was recorded correctly and the title is accurate, you can easily refinance the contract for deed.  If that is not the case, then you have to restructure it like a purchase transaction again.

At the end of the day you are bringing cash to closing but how do you go about getting that sometimes if you don’t have the liquid cash?  One option is if you’re in an equity position on your primary residence, you can look at doing a cash-out refinance or a home equity loan to obtain that.  If you have a 401k or IRA that allows you to access that before you get to a certain age, that’s an option as well.  A sale of another asset, such as an ATV or vehicle, is another way of getting that kind of money.

The next main topic of discussion was about de-cluttering and staging your home to sell.  Alexander’s created a program a few years ago that helps with the de-clutter process.  They did some research on de-cluttering and staging a home, and found that 99% of the time, the home needs to be de-cluttered and staged.  They also found that sellers that spent $500 on staging/de-cluttering recovered over 343% of the cost when they sold their home.  Cleaning and de-cluttering is the least expensive improvement with the highest return when it comes to selling your home.

The program that they offer is a full-service program that provides a staging solution to pull all of those things out that you do not need in the home when you are trying to sell it.  Alexander’s does all the work and heavy lifting and has it scheduled with their crews in 2 days and it’s done.   All the crews are background checked and drug tested with no criminal records, so they do know who these people are before letting them into the house.   They offer a pick-up charge of $250 to pick up one vault worth of goods.  A vault is 7 feet tall, 7 feet deep, 5 feet wide, holds about 1000 pounds of goods which is about one room’s worth of stuff.  They store that one vault for $30 a month.  If you go to 2 vaults, the pick-up charge changes to $300 and $60 a month to store those vaults.  When the house sells and you move to a new home, if Alexander’s is involved on the main move there is no charge for the redelivery of vaults in storage.  If the customers do the main move on their own, Alexander’s will deliver the vaults for the same amount they charged to pick them up.

Tips to lessen the cost of a move:

  • Go through and stage your house.  If you move everything down to the main floor or move things to the garage this will save time and then save you money.
  • If you go through your house and make a map of your new location, color coat everything, draw where things will go, that will speed up the whole process.  Give this map to the movers and then it will make for an easier and faster move.
  • On the interstate move, the cost depends on the weight of the shipment and the distance you are traveling.

You can find more moving tips here:


App: Move Atlas

Text Question:  The person is in the process of painting and doing repairs on the property.  Wondering if they should put the property on the market before those repairs are done to beat the spring rush or wait until those repairs are complete?

Mindy Frost: Go ahead and do the repairs and paint first.  If you were to go into a property and the floors aren’t clean and the home isn’t ready, it’s hard for a buyer to see past all of that and envision themselves in the home.  Make sure it is clean, inviting, and all of the lights are on for showings.

Andy Prasky:  Remember you are preparing the house for your buyer not yourself.  Make sure it’s staged and ready to go and then put it on the market as fast as you can.

Text Question:  What if someone wants to buy a vacation home in a different state.  Does the same information apply for those vacation homes?

Travis Whitford:  There’s a misconception that you have to find a lender in that state.  If a lender is licensed in that state you can obtain your financing in Minnesota to buy that property in Minnesota and then the same information applies.

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