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Why I Bought My Second Home Before My First Home: Money, Freedom, Fireflies

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Couple in country house (©Trinette Reed/Blend Images LLC)

Like a lot of New York City residents who don't work in finance or have access to family money, I've always regarded the real estate market here as "not for me." Over the past 20 years, I've watched neighborhood after neighborhood pass me by in terms of affordability. Where once a half-million bucks bought a Brooklyn brownstone in need of TLC in, say, Fort Greene circa 2000, that same house will now set you back $3 million. A bargain-priced "handyman's special" former tenement two-bedroom on the Lower East Side? A "full of character" Long Island City, Queens, townhouse with bragging rights -- worthy monthly payments and awesome views of Manhattan? All History Channel stuff.

So someone with my income -- which would make me quite comfortable in any part of the country not named New York, San Francisco, or Silicon Valley -- is left with three choices:

  1. Spend everything to buy in a neighborhood with mediocre schools, a far stretch from my usual social scene, and aesthetics that could best be termed "challenging."
  2. Rent a nice, livable apartment, hoping for the (peaceful, timely) death of a moneyed aunt to aid the purchase of a future place that, while not ideal, at least won't depress me each month when I'm making that $3,500 mortgage payment.
  3. Buy a "second home" -- even though I didn't actually own a first one. Which is what I did.

In 2007, my wife and I closed on a farmhouse on a stunning piece of land in the Catskills for $260,000, which wouldn't even get us a studio apartment in our Brooklyn neighborhood of Boerum Hill. Sure, the place was in need of work -- a modified two-story farmhouse with a case of 1960s renovation blues -- but the views were incredible, and the town had a wonderful mix of farmers, ex-farmers, NYC transplants, and second-homeowners (many in the same boat as us). It offered us the chance to invest in a property without mortgaging our future on a million-dollar box of depression.

We needed two things to make it work: enough money for the down payment (in our case, about $50,000) and -- this part is key -- a city apartment with below-market rent to make it economically feasible. The combination of our mortgage plus our rent is what most of our friends pay just to rent their (admittedly, much nicer) apartments. But if you buy wisely, you can still pull it off while renting an apartment closer to market rate. You'd be surprised by what $120,000 will buy you in upstate New York.

Once we came up with a game plan, a major question remained: How would we pull it off? Here's our insider's cheat sheet.

Figure out the 'first second home' financing

My wife and I have good credit, so we were quickly approved for a $200,000 loan at 6% (refinanced two years ago to 4%). Because we didn't already have a mortgage or own another house, the bank didn't look at this as a "second home" purchase, which tends to be harder to finance and often carries a higher interest rate. In fact, we were (tacitly) encouraged by pretty much everyone involved to proceed as if this would be our primary residence. This made sense to us as, well, we didn't own anything else. Though some years we might not be there the requisite 183 days a year to establish residency, it would be our primary residence, because it was the only residence we owned. On paper, we were buying that house and moving in.

If you're lucky enough to be able to work at home, you can claim primary residence and not have to pay those notoriously high NYC income taxes. I couldn't manage that myself, and faking it is risky (not to mention illegal): Your ATM and E-ZPass will sink you quickly if you ever got audited.

Decide whether to make money on it -- or not

We couldn't live there full time, or work from there, but we also didn't want to be landlords. Plus, we don't have to pay tax on that would-be income or declare the place as a business, which would make things complicated if we tried to sell; capital gains snatches up a sizable amount if it's not your primary residence. Plus, we could afford our mortgage. Much of the time it's empty, but we love letting friends use it whenever we can; we'd rather have someone there than not.

But others may want to go the Airbnb/VRBO/Craigslist route, which can cover a significant chunk of the mortgage. Don't forget to file those tax forms, though.

Understand the stuff you never realized you'd pay for

As much as we love the nature, the quiet, and the views, this kind of homeownership has its drawbacks, especially when we're not making a profit.

Think of all the responsibilities that come with owning a house. Now think about having that house 150 miles away. Is there too much snow on the roof? Is the basement flooding? Did the contractor show up and fix the sagging hearth? These are things that keep me up at night.

When you own a weekend home, you end up paying for services you might never use if it were your primary residence. After realizing that I spent three hours each weekend mowing the lawn, I decided to pay someone to do it ($75, but I have a big lawn!). The same with plowing the snow ($20). You have to pay someone to get the mail, check the pipes (and call a repairperson if they're frozen), and keep an eye on the place, though we are blessed with a great neighbor who does it for less than the cost of a fancy New York City meal (she feeds our cat, too, who lives there full time).

As with any fixer-upper, you have to get used to the fact that most of your extra cash will go into the house. What makes it more complicated is renovating from 150 miles away -- it's as hard as it sounds. We renovated the kitchen so it opens to the back and the view, and we put in dormers to make a "real" upstairs out of a glorified attic -- all with the help of FaceTime.

Enjoy! Home is where the country is

Still, it's worth it. For now. Brooklyn may be where we live and work, but the Catskills is where we feel most at home. It's where we celebrate Thanksgiving and Christmas. It's where my wife and son have spent the past two summers almost exclusively, hanging out with a group of other families, many of whom are doing what we do. Despite the three-hour drive (!) we look forward to hitting the road every Friday and find ways to eke out extra time on either side of the weekend. My bedroom upstate contains the various objects and life souvenirs that I care about. My bedroom in Brooklyn contains my work clothes and a large canvas L.L.Bean tote packed with things to take upstate. I am grateful for the cheap-ish rent, but I feel no love for my tiny two-bedroom apartment.

There is something else we didn't consider when we embarked on this adventure: You have to really want to be in your "second" home as much as possible, otherwise you endure a certain level of guilt when you vacation anywhere else. Shouldn't we be upstate, working on the house? The sad reality is always lurking there in the bushes -- the second house won't always make sense for your life. When you're single or married without kids, escaping to the country is a blissful way to spend your free time. And then, suddenly, you have two school-aged children and that free time disappears.

But I wouldn't trade anything for the time I spend with my older son (my other son is an infant, so he's just getting to know the place), running barefoot outside, throwing rocks in the pond, digging up carrots we planted on Memorial Day weekend. This despite the fact that we go to the house less often now than we did before they came along. Classmates' birthday parties (those damn birthday parties!), sports, the hassle of strapping a 4-year-old and a 1-year-old into the car for a three-hour drive mean that "every weekend" has turned into "two or three times a month" in warmer months, and "once a month" in winter.

For now, we will continue the bifurcated existence. My kids will learn to navigate life in a 700-square-foot apartment in the city, and on a 10-acre former dairy farm where coyotes wake you at night with their howls. My wife's freelance work means that the kids will be spending another summer almost exclusively up there this year, running after lightning bugs and learning to swim at the town pool while I toil in the hot city. Luckily, I have my L.L.Bean tote packed and ready to go.

The post Why I Bought My Second Home Before My First Home: Money, Freedom, Fireflies appeared first on Real Estate News and Advice - realtor.com.