“A lot of times, we’ll help people uncover that they can do it sooner than they thought,” LiPari said. “We can help people uncover using leverage to acquire properties a bit sooner. A lot of that’s in the vacation home space. We work with a lot of clients who will say, ‘I love vacationing wherever, down at a beach community, but we’re not quite ready to carry the property ourselves.’
“We say, ‘Well, you told me you’ve been renting there every two weeks out of the summer. I know that’s not cheap, so we could even look at a model for them to see if they do almost like a hybrid, where they rent the property out most of the year, but they leave one week for their family. Now they’ve bought the asset.”
By choosing to structure the deal that way, the homeowner picks up the investment property years before they probably thought they would, which means they likely get it at a discount compared to what it would cost to buy it in a few years.
“Most vacation areas, specifically in New Jersey, those are not going to stop appreciating,” LiPari said. “So you have the asset now, and it might be 10 years from now before you feel comfortable having that truly as a sole second home, but you’re going to be happy 10 years from now that you did it this way, because it’s going to be that much more expensive in 10 years.”
Leveraging mortgage debt
Brokers can work with homeowners to look ahead, allowing them to leverage the built-in equity in their current properties to acquire more properties. It takes planning and foresight to get borrowers to understand that a little short-term debt can turn into major long-term wealth.
