Buy a Beach House With Your Tax Refund

Every year, you anticipate getting a tax refund. You dream about what you’ll do with the money. "A week in a coastal-resort vacation home near a white-sand beach would be nice," you say to yourself. Unfortunately, if you’re like the majority of us, once your refund comes, it gets spent here and there and, months later, you wonder what happened to it. Why not do something different this year, and perhaps make an investment? With a refund of only $700.00, you could enjoy that white sand beach you’ve dreamed of. In fact, you could even own a home by the beach, and enjoy perpetual resort living. "How can I own property at the beach for only $700.00," you wonder? "Don’t beach front condominiums go for $800,000.00 or more?" Yes, they do. But we’re not going to consider condos. Or townhomes. Or even single family homes, for that matter.

We’re going to look at mobile homes! Mobile home communities can be found in many resort areas, Rehoboth Beach in particular, with homes starting around $25,000.00. Many of these communities offer waterfront lots that boast the same views as the million dollar homes sitting on adjacent properties. Some mobile home parks even offer the same amenities that the resort area condo and townhouse communities boast about. Swimming pools, tennis courts, club houses, private parking, playgrounds and water access for boating and recreation are among the numerous privileges that members of some mobile home parks enjoy.

So, how do you turn your $700.00 tax refund into a vacation home in a coastal resort town? Your tax refund will most likely be enough of a down payment to get you started. The age of the home is an important consideration, because older homes may require larger down payments and slightly higher interest rates. Homes built before the early 80's are sometimes difficult to get financing for, so you may want to limit your search to "younger"homes.

If you’re a handy person and enjoy home improvements, fixer-upper mobiles offer the best value, and can be found starting as low as $15,000.00. The amount of improvements needed to make one move-in ready will obviously depend on its condition. At the $25,000.00 range, you can expect to need new carpeting or vinyl, and perhaps some updated lighting and bathroom fixtures, faucets or similar details. At the other end of the spectrum, a brand new, double-wide, 3 bedroom, 2 bath home will run closer to $80,000.00, but will be gorgeously move-in ready, and may include modern features like vaulted ceilings, upgraded appliances and attractive lighting and bath fixtures. A monthly payment on a home like this may run between $700-$900/month depending on interest rates (typically in the 8-11% range), with $700.00 down. Older double-wide models start around $60,000.00.

Since the land the home sits on is technically leased from the community, you will be required to pay lot rent as well as your loan payment. Waterfront lot rents may run $500.00-$1250.00 a month, while non-waterfront lots will usually be less, perhaps as low as $350.00-$650.00 per month. Most communities charge lot rent on a monthly basis, but some, particularly the Pot Nets Communities, require that it be paid in advance for the year. Owners can expect lot rent to go up 3-5% annually. To save a bit in lot rent, you may want to forgo the waterfront property, and opt instead for something a couple lots back from the water. This is particularly true if the community you’re considering offers water access for all residents.

If waterfront is what you really want, remember that you’ll still be saving considerable money over the folks who choose to purchase waterfront condos, townhouses or single family homes. Combining your loan payment and lot rent, you could hypothetically pay $1200.00-$2150.00 per month for your waterfront mobile home at Rehoboth (depending on the community), while the $800,000.00 condo dweller will be stuck paying over $4680.00 per month, for the mortgage alone, assuming a 6.5% interest rate, and 10% ($80,000!) down. This doesn’t even include home owner’s association fees, which could add another couple hundred dollars a month.

Aside from the overwhelming difference in cost, there are a few notable differences between the sales transaction of a mobile home and a traditional home. Applicants to mobile home parks will be asked to submit to a background check, as well as a credit check. Because your mobile home is technically a motor vehicle, it’s title will come from the Department of Motor Vehicles and interest on the principle of the loan is not tax deductible. However, your monthly savings over a condo or townhouse mortgage will more than make up for that.

If you, like many of us, dream of living near the beach, but are unable to purchase traditional coastal resort property due to the tremendous expense, consider the value of purchasing a mobile home, and compare the cost savings to that of a traditional waterfront property. Your tax refund could be the beginning of making your dream of living at the beach a reality. Enlist the help of a realtor specializing in mobile home sales, who has access to lenders offering mobile home financing, and your dream could come true for as little as a $700.00 tax refund.