Financial Benefits of Owning a Second Home

Owning a second home may afford you many of the benefits of primary homeownership, whether it is for your own vacation use or it’s a property that you lease out for income purposes.

If you intend to use the property as your personal getaway, you can deduct your mortgage interest and property taxes. In addition to those savings each year, you will possibly enjoy increased appreciation, and your increased equity in the property will eventually put more money in your pocket. You may also opt to occasionally rent the property out to offset some of your costs.

Although you are not allowed to deduct mortgage interest from a property that is used strictly as a rental property, you can deduct operating expenses up to and exceeding your rental income. You can also deduct any losses when you sell the property.

Before you invest in a second home or income property, speak with your accountant or tax advisor. There are strict rules about personal usage and length of ownership that apply to investment property if you hope to enjoy the maximum tax benefits. Either way, owning a second home can prove to be a smart move in your financial future.

Multi-Part Series on Our Favorite Walking Trails - Part 2: CLAPPS POND

The largest pond in Provincetown is called Clapps Pond and there is a beautiful walking trail that encircles it. The pond and its environs are located off of Route 6 near Shank Painter Road on approximately 47 acres. The area surrounding the pond is a scrub pine forest and because it is more protected, the pines will be taller and you will also see oak and birch trees. Always keep to your left on this trail. As you walk up a slight incline, Clapps Pond will come into view on your left. Keep your eyes open for other kettle ponds on your right. You can leave the world behind as you encounter few others. This is a wonderful place to walk with your dog. You may see exciting wildlife during your walk, including wild turkeys, coyotes, foxes and deer, in addition to abundant bird life.

To return, retrace your steps back to your car. Don’t forget to bring water, especially if you take your dog. During late spring and early summer, pack insect repellent. Don’t forget sunscreen and check for ticks when you return.

If you walk this trail or Hatches Harbor, which we described last week, let us know your impressions. Enjoy.

Directions: You access this trail off Route 6. From town, drive down Shank Painter Road (the Grand Union is on this road) toward Route 6. Take a left on Route 6 toward Herring Cove. Almost immediately you will see the entrance to a fire road on your right. You can park on Route 6 here but take care not to block the fire road entrance.

Multi-Part Series on Our Favorite Walking Trails - Part 1: HATCHES HARBOR

As spring approaches, thoughts turn to the outdoors here on the Outer Cape. Provincetown, Truro, Wellfleet and the National Seashore offer many beautiful walking trails near the ocean and deep into the woods past sparkling kettle ponds. Thanks to President John F. Kennedy, much of our wildlife and natural environment was protected when he signed a law in 1961 authorizing the creation of the Cape Cod National Seashore, which encompasses 43,500 acres and 40 miles of seashore along the Atlantic Ocean.

One of our favorites in the Seashore is the Trail to Hatches Harbor. You access this trail off of Provincelands Road. (Directions Below) The first section is on a level, packed sand trail which takes you through a scrub pine forest. You will notice the trees seem stunted. This is due to the harsh environment of salt spray and high winds especially in the winter. After approximately one half mile the trail opens up to Hatches Harbor tidal marsh. You will now be walking on an earthen dike which splits the marsh in half. Race Point Light and the keeper’s house are in the distance and the dunes of the Provincelands are straight ahead. This area has abundant birdlife and spectacular views. Keep your eyes open for the Great Blue Heron. Walk as far as you like, even out to the Light House. (about 45 minutes each way). If you choose to walk out to the Light House, be mindful of the tides – it is best to go during low tide. Just beyond the Light House, the ocean awaits you for a refreshing swim on a hot day.

(Little known fact: The residence located at Race Point Light, which was built in 1840 and was originally occupied by the light house keeper, is available for overnight stays. It is maintained by a non-profit organization and more information can be found by clicking here)

Directions to Hatches Harbor: From Route 6 near the Conwell stop light, turn right onto Race Point Road. When you see the Seashore Visitor Center on the right, take the next left toward Herring Cove Beach. At the bottom of the hill (less than a mile) you will see a parking lot on your right near the bike trail tunnel. Park in the lot and walk toward the fire road. The trail is well marked.

Next week, we will take you on a walk around one of our favorite Kettle Ponds.

Assessing an Upgrade

Q: "Mike, I am struggling over the fact that it is a great time to buy but I don’t have any liquid cash to do so. I don’t mean to exploit someone’s financial distress, however, I’ve identified a home in a location I’ve wanted for years that seems to have a selling price created out of urgency. In Provincetown dollars of course it is still pretty high, but manageable for me if I can sell my house and apply the equity. Is it realistic to think that I can sell my property in this market and upgrade to this house in what I perceive as a better location? Should I wait for the house to foreclose?" - Matthew, Provincetown

A: Thanks Matthew and this is a very good question. Let me start by strongly advising not to wait for a foreclosure. In Provincetown, the foreclosures we’ve seen have not been Earth shattering deals. If you identify a property you like and the seller has disclosed extreme motivation, you are in the driver’s seat for a great deal. Maybe even a short sale. Once the bank takes over, they attempt to hold to their bottom line and recapture some of the expense of the actual foreclosure.

The real estate market remains soft. We are definitely seeing activity but 2007 is in line to be a slower year than 2006. However, with that said, what is selling is property priced according to the market conditions. I’ve said this before and I’ll say it again. Property priced right in any market sells. Priced right does not mean pricing high and it does not mean under-pricing either. 

If you have sizeable equity in your home and you can afford to price it competitively. Then I recommend you go for it. The perceived loss on what you’d want to sell your existing property for in a stronger market will be re-couped in the appreciation of the home in the better location, not to mention the happiness you’ll feel achieving the goal of living in a location you really want to be in.

Consult your realtor and you’ll see that there are many incredible opportunities out there. Go for it and next year you’ll be thankful this week, that you made the move. Remember, in the current market, it is taking 9 months to one year to sell prop.

The Market is Active!

Market Snapshot
Activity since January 1, 2008

For those of you who are wondering how the market is doing this year, here is a year-to-date account of what’s happening in the three towns on the Outer Cape!

Provincetown:
There are currently 317 properties for sale, including Single Family, Multi Family, Land, Commercial, Condominiums and Hotel/Motels.
33 properties are under agreement, and there have been 29 sales ( 24 condos, 3 single families, 1 hotel, and 1 Multi)

Truro:
There are currently 196 properties for sale, including Single Family, Multi Family, Land, Commercial, Condominiums and Hotel/Motels.
19 properties are under agreement, and there have been 7 sales (3 condos, 3 single families, 1 Piece of Land)

Wellfleet:
There are currently 131 properties for sale, including Single Family, Multi Family, Land, Commercial, and Condominiums.
12 properties are under agreement, and there have been 8 sales (6 single families, 2 Commercial Sales)

The Grass is Always Greener

It's mid-March and soon the sun will shine brighter, days will get longer and spring will arrive.

If you have a lawn, here are some quick tips you may want to follow in order to make sure you have green and lush grass.

1. Rake the lawn to remove all dead leaves that the blustery winds of winter blew onto your lawn. If there are no leaves, rake the lawn thoroughly to remove dead grass. Raking removes thatch, a build up of dead leaves and grass which prevents the proper growth of individual blades of grass.
   
2. If you have mossy type plants growing in your lawn, you may want to apply lime to ensure the soil acidity is proper for grass. Not every lawn needs lime so exercise caution and read instructions.
   
3. Seed the lawn. If you have bare spots that need to be seeded or a part of the lawn is worn after being used as a walkway during the winter, get out the rake again. Pay special attention to these areas with the rake to make sure all thatch is removed. Then, use a garden rake to create grooves for the seed. Spread the grass seed. Ask your garden center expert about which seed is best for your location.
   
4. Once the lawn is raked and seed planted, buy a multi step fertilizer and weed killer. Spread this over the entire lawn. Follow the instructions and make sure you don’t over apply. If you use too much fertilizer, it will burn the grass causing more harm than good. Make sure your fertilizer is a cool season fertilizer depending on where you live.

A typical time to start spring lawn care is now if you have warm weather. You can wait as long as mid April providing the weather is cool. Temperature for sprig lawn care should be at least consistently in the 50’s.

Once you follow these simple steps, you too, can enjoy tall glasses of cool lemonade while standing barefoot in cool green grass.

Put It In Reverse

Reverse mortgages are becoming increasingly common as baby boomers reach retirement age and are seeking ways to supplement their income.

These mortgages can be a welcome gift for those homeowners who have a sizeable chunk of equity they can draw from. The interest rates on reverse mortgages can be quite competitive and can be the answer many retirees need for that extra cash.

However, using a skilled and reputable mortgage company or bank is strongly encouraged. There are sinister organizations popping up that are promising low closing costs and cheap financing. These mortgage vampires are preying on retirees and feeding off their equity.

On Sunday, The Boston Globe reported that a certain company has been providing reverse mortgages with an agenda to unsuspecting consumers. When the reverse mortgage closes, homeowners are finding that they unwillingly commit most of the proceeds of their mortgage to investment schemes created by this particular mortgage company.

We must always act with diligence and use trusted real estate professionals when refinancing, especially with reverse mortgages.

Keeping your home in which you live until the very end, is part of the American dream. The reverse mortgage, when calculated properly and used for its intended purpose can make this a reality.