Scotsman Guide - August 2011 Residential Edition

By James Johnson Founder and CEO ResortLoanSource.com

How;to;Tap;the;Vacation-Home;Marketplace
With real estate struggles come opportunities for a new focus

After a decade of the most spec- tacular expansion and contrac- tion in the history of the real estate market, there is no better time to examine new business opportunities. Rarely, if ever, has the climate for real estate investment been so good, especially when it comes to vacation and resort properties.

to tap this market, mortgage originators must identify customers and properties, assess opportunities, and provide access to purchase funds. You also should understand some key differences between vacation homes and investment homes:

• investment properties are typically
purchased for much less than vaca-
tion homes.

• investment properties are typically
located closer to the buyers’ primary
residence.
the National association of Realtors
to recreational opportunities such as
those afforded by an ocean, river or lake.

deposed baby boomers as the primary purchasers of vacation homes. although these generations share many of the same values, their members often regard vacation property differently from one another.

“Because many resort
areas are located away
from population centers,
the level of competition
from other mortgage
originators could be minor.”

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More than half of boomers who purchase a vacation home envision themselves retiring there. On the other hand, gen X buyers consider it a second home for their own use and that of family and friends.

Both generations, however, show little interest in purchasing raw land and constructing a new home. In addition, neither group likes ongoing costs, such as homeowners’ association dues.

although the vacation market will continue to be nearly equally divided between these two generations for the next few years, mortgage originators entering this market should pay careful attention to the shift in buyer dynamics. Buyers wanting a party pad often seek different property types and locations than those buying a vacation home they plan to move into full-time in a few years.

Resort-property loans will often involve purchase transactions for single-family detached residences. Refinances and loans for land, construction, log homes and condominiums will provide niche opportunities.

Because many resort areas are located away from population centers, the level of competition from other mortgage originators could be minor. Often, local banks comprise the only existing loan market. these lenders have been hit hard by the market collapse and generally offer only conservative loan products. this leaves many lending needs unmet.

there are five keys to working with vacation properties and their buyers:

1. know the customers: technology al-
lows many people to live where they
used to vacation and to vacation
where they used to live. Nowadays,
you can conduct business from al-
most anywhere. the baby boomer
generation will fuel the retirement
home market while continuing to
be a significant — but declining —
component of the vacation market.
generation X will increasingly domi-
nate the vacation-home market.
Both generations use e-mail and the
Web extensively.

SM

James Johnson, also known as JJ Johnson, has worked in the mortgage industry since 1977. He has held executive-level positions with Internet, communications and net-branch companies, and has extensive expertise originating resort-property loans. Johnson is founder and CEO of ResortLoanSource.com, a lead-generation service that uses Web and social media to connect resort-property customers with lending sources and is based in the resort community of McCall, Idaho. Reach Johnson at (208) 634-9770 or jjjohnson@citlink.net.