Owning a Second Home in Central Oregon and How it Works

Homeowners consider purchasing a second home in Central Oregon for a variety of reasons. A desirable lifestyle and countless options for recreation, entertainment and craft beverages ranging from beer to kombucha influence many homeowners to purchase Central Oregon real estate as either their primary or secondary residence. Buyers coming from out of town enjoy having their own personal space when visiting their favorite mountain town. Others use their second home as a vacation rental when not staying in the home themselves.

We encounter many buyers considering adding a second home as an investment property and vacation rental throughout Central Oregon. Bend offers the excitement of a small city with plenty of fine dining options, culture and entertainment options and a close proximity to recreation throughout the Cascade mountains. Sunriver reigns as the family-friendly vacation destination of choice for many travelers throughout the Pacific Northwest. Allow us to explain what you can expect when buying a second home in Central Oregon and how renting it as a vacation home works.

Considerations When Buying a Second Home in Central Oregon

Many considerations come into play when buying a second home in Central Oregon. Many articles you read about buying a second home discuss whether or not you’re rushing into the decision or if you can afford it. While these factors do weigh heavily on your decision, we know the questions on your mind at this point in the process include:

  • How do you plan to use the home?
  • Do you want to generate rental income from your home?
  • How do you choose the right property?
  • What are the financial benefits of renting your home?
  • Will you hire a property manager?
  • What’s your ideal location?
  • What are the initial and ongoing costs of owning a second home?

While many of these questions can only be answered by you, local realtors like Scott and I can assist you in retrieving additional information about the second home buying process in Central Oregon.

Initial and Ongoing Costs of Owning a Second Home

When considering the purchase of a second home, the initial and ongoing costs always play a role in the decision-making process. As with the purchase of any home, buyers must factor in closing costs and down payment. Before contacting a realtor, be sure to verify that you have enough cash to cover initial costs, while still having enough reserved for emergencies.

Ongoing costs of owning a second home in Central Oregon include your monthly mortgage payment, as well as taxes, utilities and insurance. Purchasing a condo or townhome can also include homeowners association fees. Whether you rent your property as a vacation home or strictly use it personally, maintenance costs will weigh into your budget. Take into consideration what kinds of help you’ll need, especially for owners with a primary residence out of the area. Will you hire a housekeeper, landscaper, property manager or hot tub maintenance company?

If you decided to rent your home as a vacation rental, take into consideration the costs of marketing your home to potential renters. Hiring a property manager can include marketing costs, as well as maintenance and housekeeping. Ensure when purchasing a second home in Central Oregon that you have enough money reserved for potential repairs. If you rent your home as a vacation property in Sunriver, for example, ongoing costs may include annual SHARC passes for guest use and purchasing a fleet of bicycles for the home.

Renting Your Second Home as a Vacation Property

Many homeowners considering buying a second home in Central Oregon do so for the investment benefit of renting it as a vacation property. Central Oregon generates a large amount of revenue from tourism, which includes vacation rental income. If you’re considering buying a second home, renting it as a vacation property offers many advantages.

Financial Benefits

Deciding to rent your second home as a vacation property in Central Oregon can be a financially wise decision based on the geographic location of the home, the home itself and the potential rental income generated. Vacation properties maintain their value and appreciate, especially when located in desirable areas like Sunriver, Bend, Redmond and throughout Central Oregon. Value fluctuates, as it does with many other investments, but real estate remains a great investment financially.

Some homeowners prefer their second homes to remain unoccupied when they aren’t using for their own personal enjoyment. If you opt to take this route and only rent your home no more than two weeks a year, the interest on the mortgage and the property taxes can be deducted from your gross income. For tax purposes, you can treat the mortgage on a second home the same way you would on a mortgage for your primary residence.

Potential rental income comes as the largest financial benefit for second homeowners in Central Oregon. If you occupy the property fewer than 10% of the days you rented it, or for less than two weeks, you can deduct all of the operating expenses of the home — that includes interest, cleaning fees, lawn maintenance, management fees and utilities. Rental fees vary depending on the seasonality of the area, but it’s possible to break even throughout the year.

Our colleagues at Sunset Lodging in Sunriver completed an extensive study on rental rates in the resort community of Sunriver. Through their research, we can see what the potential rental income would be on homes of varying sizes in the area. The following numbers represent annual income based on the number of bedrooms a home has:

  • 1 Bedroom — $6 – $12,000
  • 2 Bedroom — $12 – $18,000
  • 3 Bedroom — $14 – $22,000
  • 4 Bedroom — $18 – $35,000
  • 5 Bedroom — $40 – $60,000
  • 6 Bedroom — $55 – $90,000
  • 7 Bedroom — $70 – $105,000
  • 8 Bedroom — ~$130,000+

As you can see, the more bedrooms your second home has, the greater the net income. We’ve learned from Sunset that homes with at least five bedrooms are booked for longer stays than those with fewer bedrooms. Despite pet concerns, property managers recommend making your home pet-friendly as it’s generally deemed a net positive. For homes with fewer bedrooms, proximity to community amenities is more important than for those with more bedrooms. Condominiums typically earn less revenue and have additional HOA dues associated.

One financial concern for homeowners considering the purchase of a second home comes in home maintenance. However, by using a property manager to manage the rental and upkeep of your vacation home, can save you in third-party maintenance and housekeeping costs.

Finding a Second Home

One of the most important factors in purchasing an investment home comes in the location of the home. Choosing a home in an idyllic neighborhood can make all the difference in how much revenue you earn from renting your home as a vacation rental. For example, buyers hoping to invest in a Sunriver vacation home may consider a smaller home close to The Village or SHARC. Those considering bigger homes, over five bedrooms, have more leeway when it comes to location.

For homeowners considering a second home for personal use, location falls more to your personal preferences. Would you rather be close to your favorite golf course or close to downtown Bend? Does a secluded Tumalo property with amazing acreage appeal to your future retirement plan? Homeowners hoping to retire to their second home someday will want to select a location they enjoy with easy access to the amenities you desire most.

Beyond the neighborhood, the home itself has the most influence on your decision. Do you seek something that has a mountain modern feeling? Or does the craftsman style appeal more to your aesthetic? Does the minimal maintenance of a condominium community appeal to your lifestyle? Choosing a home within a condominium community offers many advantages for those seeking a second home with minimal maintenance and upkeep costs.

Choose a Local Realtor

When you’re ready to start looking at potential second homes in Central Oregon, engage a local realtor with the experience and knowledge necessary to assist you in finding your dream home. At Tuttle and Tuttle, we have owned a second home in Sunriver and rented it through a local property management company. We have experienced exactly what you’re going through first-hand and can answer any questions you may have about how to own a second home in Central Oregon.

In addition to our experience renting our second home as a vacation rental, we’ve also been top performing agents in Central Oregon every year since 2014. We know Central Oregon and specialize in luxury properties. We’re skilled in marketing and negotiations. We’ll help you find the perfect second home to meet your needs in Central Oregon.

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