By S. Mitra Kalita
Amanda Baudier had been living in New York City for nearly 20 years when the pandemic hit. In March of 2020, she was eight months pregnant and fled to live in her parents’ basement in Maryland. She delivered a baby girl, then rented an Airbnb /zigman2/quotes/222990650/composite ABNB +2.18% in the Hudson Valley for the summer.
“The monthly rental prices were astronomical — more than a luxury penthouse in Manhattan — so as soon as we settled into our rental we decided we might as well just pull the trigger and buy a home,” she said. They made an offer on a house in Pine Bush and have been living in their second home full time.
After friends kept reaching out asking for advice, Baudier decided to focus squarely on the second-home buying market as a realtor. She also works as a life coach and a yogi, which basically are all skills she needs to rely on for this hot market, especially for New Yorkers seeking escape . The Escape Home asked her about what buyers need to know right now. Edited excerpts:
<STRONG>EH: </STRONG>When we bought a second home, a frequent Google search was “people who regret buying a second home” and “how often do you really use a second home?” Are these questions your clients have?
AB: If the past year has taught us anything, it’s that no one has a crystal ball to see into the future. Most of my clients come to me very ready for second-home life. For those that are on the fence, I recommend that they look to their past to gain certainty. Questions to ask:
Has your family rented Airbnbs/hotels in the same area or type of area repeatedly over a number of years?
Do you have a family member who loves to hike, ski, or engage in other outdoor activities that are hard to come by in the city?
Do you have to travel to your in-laws or your suburban siblings’ homes to celebrate holidays rather than hosting, due to lack of space?
If yes, you will probably end up using your second home a good amount! If that doesn’t help them, I’d never push further. Second homes are a blessing for many of us but they aren’t for everyone.
<STRONG>EH:</STRONG> Tell me what the second-home market looks like after Covid.
AB: I think a lot of people realized that they really wanted a second home during COVID but weren’t able — or willing — to pay the jacked-up prices that the pandemic provoked. These patient and savvy buyers will enter the post-pandemic market having had time to marinate on their decision and likely narrowed in on the exact location they want as well. While the market won’t be as hot as it is today, I predict there will be a steady stream of buyers who are buying before they need to in order avoid the next second home rush.
<STRONG>EH:</STRONG> How much house can we buy? What’s the answer? Tell us how Airbnb and short-term rentals play into people’s calculations.
AB: Most of the families I work with consider short-term rental (STR) income as a nice-to-have but not a make or break, and that is the right approach. Predicted Airbnb + STR income will not help you qualify for a mortgage, even if the potential is quite significant. I know plenty of people who pay off their entire year of expenses with a one-month rental, particularly in desirable areas or houses with killer features (in-ground pool being number one) but that’s certainly not the case with every home.
I recommend that they check AirDNA to gauge rental income potential, but for anyone who is dead set on buying a “profitable” home, I refer them out to companies like Home Sweet Hudson who specialize in this. In addition it’s important to check with local authorities to ensure STRs are legal in the area where you choose to buy and be aware that new laws come on the books all the time. I am pretty risk-averse myself and never talk up “income potential” to a client as a selling point.
<STRONG>EH: </STRONG>Dumb question: Can you define the Catskills for us? What’s the difference between that and the Hudson Valley?
AB: Some people use the terms interchangeably, and they aren’t incorrect as they do overlap. The Hudson Valley is a huge area along the Hudson River encompassing many counties — from Yonkers all the way up past Albany. The Catskills are a mountain range that runs through the center of the Hudson Valley and occupies Sullivan, Delaware, Greene, and Ulster counties. Most people buying second homes in the area like to be near the mountains for the picturesque quality as well as access to hikes, skiing and more.
<STRONG>EH: </STRONG>Do you have any secrets to landing the deal? Homebuyers tell us it is SO hard out there.
AB: Be prepared and decisive! In this market, there really isn’t time to hesitate.
If you go to an open house on a Saturday, you should be prepared to put in an offer that day or at least by the end of the weekend.
You need your pre-approval letter before even stepping foot in a potential home. That’s just table stakes.
Be prepared to offer ask, above ask, and/or pay additional cash upfront if your appraisal comes in low, due to the comps not being current with the peaking market. I personally don’t advise clients to waive contingencies (financing, inspection, etc.), though some agents will.
The less “strings” attached to you the more attractive you are to the buyer, but I’ve seen some hairy inspections and would hate for a client of mine to regret their decision later.
Though sometimes a heartfelt letter can help, at the end of the day, real estate transactions are just that: transactional. And if you lose out on a house don’t lose hope! There will always be another.