Summer on Martha’s Vineyard is an annual tradition for thousands of families. Some stay for months in plush vacation homes, others rent a room in a B&B or crash with friends for a few days. Either way, the urge to own a piece of the Vineyard can be fierce. And it can make sense for some inveterate renters.
Jen O’Hanlon of Lighthouse Properties in Oak Bluffs deals with both renters and buyers, and says that many people are looking for second homes now for three reasons: “They’re taking advantage of price reductions, taking advantage of incredible interest rates, and looking for a long-term, generational investment where families gather and build memories over time.” Wendy Harman of Point B Realty in Edgartown agrees: “There’s been a big uptick in people owning second homes.” The financial magazine Barron’s recently named Martha’s Vineyard number three on its list of “The Best Places for Second Homes.”
“Everyone comes to the table with a different set of criteria,” says Wendy of those looking for second homes. “We try to tailor the search to what their financial goals are.” While owning a family getaway on the Vineyard for generations can be the rose-colored ideal, both Wendy and Jen suggest that the high-value market and the tempting prices and interest rates make an Island second home a reasonable medium-term investment. Wendy says she often deals with buyers who’ve shifted away from the volatile stock market to Vineyard real estate to generate returns.
The first obvious question is: What can you afford? Wendy says she typically starts by looking at what the potential buyers spend to rent, and what that sum can buy them. “There’s a range of what people spend on a rental,” says Jen, explaining some vacationers splurge to rent a house they could never afford to buy, and others have relationships that allow them to rent at a below-market rate. If either is the case, the prospective buyer must measure if scaling down from that beachfront or in-town property is worth it.
Renting out a house to help defray the costs is another part of the equation. “If the homeowners need to make X [in rentals], we look for properties that will meet their needs,” says Wendy. But not all that money makes it into the homeowner’s pocket: Rental agencies typically take 15 to 20 percent of the rental income, which is also usually taxable. Cleaning is another cost, at $25 to $35 per hour, but most owners charge that directly to the renters, which helps encourage them to be neat. While there are substantial benefits, Wendy warns that “owning a home as a business, it’s going to be some work.” Jen notes that while prices and interest rates have dipped, rental prices and activity have strengthened: “Things have booked up way sooner [this year] than in the past three or four years.”
In addition to sales price, ownership also entails costs such as property taxes (which vary from town to town), maintenance, and caretaking and landscape services. On an emotional level, the leaky faucets and busted windows inherent in owning a home may be antithetical to a Vineyard getaway for some, while others see their connection to and enjoyment of the Island enhanced by homeownership.
Another question is how often you visit. It hardly seems worth it to own for just a week every year, and both Jen and Wendy suggest that the more a house is used, the more likely homeownership is the right choice. Shoulder and off-season occasions in particular – Columbus Day, Thanksgiving, Easter – allow the seasonal homeowner to experience the Island differently from summer visitors, and make owning a home here enriching in more ways than one.
Q: How can you get the most rental income from your second home?
A: Wendy Harman, Point B Realty: “Hotels are shrinking – the number of hotel rooms available is going down – so that vacation homes with hotel-type amenities can charge a premium.” Hotel-type amenities? “Houses with upscale coastal décor and details, high-end linens, that type of thing. So update and renovate. But also location: Walk to town or beach is huge.”
Jen O’Hanlon, Lighthouse Properties: “Renting a house from June to August is fairly easy, but shoulder-season renters are looking for deals, and aggressive pricing leads to more renters. Location is also important: Katama, downtown Edgartown, downtown Oak Bluffs, East Chop – buy in those places, and as long as you don’t overpay, you’ll be fine.”
