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Waterfront near Port Townsend - buy or not?

mingaloomingaloo
edited January 2008 in Seattle Real Estate
Apologies if this is slightly out of coverage. I am currently a Seattle resident looking to get a getaway property on the peninsula.

I have lined up a private deal to buy a waterfront property just south of Port Townsend (near Port Hadlock). The property is a charming 1 bed cabin style on 1.8 acres with 200ft of waterfront, medium bank (about 25ft bluff) and nice stairs to the beach. The most recent county assessed value is about $350k. I have the option to get it for $380k which I think is a pretty good deal but looking at the latest Case-Shiller charts and overall predictions for the Seattle area (and particularly for vacation homes) I am having some second thoughts. I thought I was fronloading some of the predicted (10%+) depreciation for the next year in the price but then again, feeling kind of nervous. :?

Any comments or advice would be greatly appreciated.

Cheers

Mike

Comments

  • UbersaladUbersalad
    No I think would be a popular answer here.
  • MarkorMarkor
    Even if the value of the getaway stayed flat, you'd probably have to use it frequently for it to be cheaper than just renting a vacation home whenever and wherever you want to get away. I know some people like to have their own place that they drive hours to every weekend, always the same place, but I'd soon get tired & bored of it. My kids would hate it.
  • carlislematthewcarlislematthew
    Figure out how much this place is going to cost you, including everything. Mortgage, utilities, reduction in earnings on the down-payment, etc. Skip NOTHING in the calculations.

    Then take a guess at how often you'll use it. Divide that number in half. That's how much you'll *actually* use it.

    Take the annual cost and divide by the number of times a year you'll actually use it. That's the cost per visit. Decide if this cost per visit is worth it for you. Research how much it would cost to rent a comparable cabin/house in a similar area.

    None of this takes equity gain/loss into consideration, and I think I can guess where most on this site fall (including me).

    I've looked into doing a similar thing and every time I do it, I end up realizing that I could rent a really nice cabin for way less money, and be able to try different places too! Ultimately I'll probably buy one, but not at the current prices.
  • UbersaladUbersalad
    ya, tell me where you're buying and I'll squat it RENT FREE =)
  • mingaloomingaloo
    carlislematthew wrote:
    Figure out how much this place is going to cost you, including everything. Mortgage, utilities, reduction in earnings on the down-payment, etc. Skip NOTHING in the calculations.

    Then take a guess at how often you'll use it. Divide that number in half. That's how much you'll *actually* use it.

    Take the annual cost and divide by the number of times a year you'll actually use it. That's the cost per visit. Decide if this cost per visit is worth it for you. Research how much it would cost to rent a comparable cabin/house in a similar area.

    None of this takes equity gain/loss into consideration, and I think I can guess where most on this site fall (including me).

    I've looked into doing a similar thing and every time I do it, I end up realizing that I could rent a really nice cabin for way less money, and be able to try different places too! Ultimately I'll probably buy one, but not at the current prices.

    Thanks for all the comments. Just finished building a spreadsheet for the next 30 years looking at downpayment investment and growth together with investing the paid interest, principal and tax/util costs. The main concern was around assessing how much of the predicted depreciation over the next 1-2 years is factored in the selling price. Zillow does not map it so based on county assessed value I think roughly 15% is there at the minimum.

    From the calculations, in the 15 year run, and assuming an average 6% annual appreciation, one breaks even with a comparable investment of the downpayment and the annual mortgage/expense contributions. On average, for the first 10 years the cost (to a comparable investment) is about 22k per year that by all means can buy at least 4 nice vacations for 2. My expectation is to visit once a month with 3 weeks solid stay in the summer. So, it averages about $650 per day of visiting per year for the first 10 years. But then there is the project aspect and the opportunity to redevelop it to something that I really like.

    I am likely going to go ahead with it....
  • Nell PlottsNell Plotts
    We had a condo at Sunriver years ago and rented it out when we weren't there. That is practical if there is someone in the community who will take care of maintenance and cleaning, and run out anyone who doesn't belong there. Frankly having those resources even if you are the only people who use it is nice. Maintenance will be an ongoing need and few want to do housekeeping at the end of vacation. Keeping squatters at bay is a necessity least someone set up a meth lab. Nosy neighbors can be your friend. Oh, don't forget to include the cost of property and liability insurance in your costs.

    Ultimately we sold our condo, twice. The first buyer bought it on a private contract but they went bankrupt (early 80s), we took it back and sold it several years later. Financially it worked out well. In your case, assuming you rent it, any depreciation taken will be real as you plan to demolish the cabin eventually.

    Be sure to have a professional look at the septic system, at least. Take a long hard look at routes for storm water, and ask the local land use planner out for a beer (so to speak). Find out how the site you have in mind fits in their plans.

    My two cents...
  • wreckingbullwreckingbull
    If you want to do it because you want to do it, (and can afford it) then do it.

    If you want to do it because you think it is a good investment, this place has money pit written all over it, starting with its price. That seems like more of a King County price than Jefferson County price to me.

    If you do it, get a good Geo-tech to give you the run-down on the bank. You would be amazed at how fast they surrender around here.
  • jillaynejillayne
    In your cost anal, make sure you factor in costs to travel to and from. For example, gas prices and ferry tolls.

    Also factor in how you're going to feel sitting in ferry lines waiting, waiting, waiting for the ferry.

    Consider the idea of feeling like you HAVE TO go there every vacation. Maybe you and the people in your life will want to go visit other places for vaca.

    Some people feel drawn to an area like Leavenworth or Snoqualmie Pass or Winthrop or the San Juans every time they take a vacation--They go back to those same places. If this city feels like it is the place you want to be every chance you get, this feeling may be pulling you more than any logical factors we may toss your way :)
  • jillaynejillayne
    Oh, FWIW, also consider what you would do if everything went to hell with your present income situation. Would you be able to carry that debt load for X months? If not, how fast would you be able to sell it or find a semi-permanent renter? If the answer is "probably not very fast" then do you have the cash reserves saved up to cover the payment for that length of time?
  • RottedOakRottedOak
    I would be cautious about Port Townsend due to the accessibility issues. There are three routes out: 1) The most direct car route to Seattle is into Kitsap County via the Hood Canal bridge, which is scheduled for a temporary closure in 2009 for repairs, then either across on the Bainbridge ferry or around the Kitsap Peninsula via Tacoma; 2) then there is the ferry service, which is in a state of flux due to maintenance problems; and finally 3) there is a stable but very long and inconvenient land route down the Olympic Peninsula, through Olympia and back up to Seattle. If anything causes options 1 and 2 to out of service at the same time, you might find yourself having more of a "getaway" than you are looking for.
  • mingaloomingaloo
    jillayne wrote:
    In your cost anal, make sure you factor in costs to travel to and from. For example, gas prices and ferry tolls.

    Also factor in how you're going to feel sitting in ferry lines waiting, waiting, waiting for the ferry.

    Consider the idea of feeling like you HAVE TO go there every vacation. Maybe you and the people in your life will want to go visit other places for vaca.

    Some people feel drawn to an area like Leavenworth or Snoqualmie Pass or Winthrop or the San Juans every time they take a vacation--They go back to those same places. If this city feels like it is the place you want to be every chance you get, this feeling may be pulling you more than any logical factors we may toss your way :)

    Thank you all! I really appreciate the comments,

    Yes, I have done a geotech report, the property has a lot of large old trees that are holding up the bank pretty well (they can tell from the bends of the trunks in the old trees if there has been any movement in the land). The septic inspection (and permit) are also good. Getting there is pretty quick, 1hr 45min from downtown Seattle via Tacoma avoiding all ferries (in off peak driving).

    Regarding Jefferson vs King county, from the analysis I have done anything close to PT or Sequim commands higher prices due to the better weather and particularly waterfront. Yes I feel drawn to it, the tranquility and access to the Olympics, PT itself is a charming artsy place. The appraisal inspector pulled up 5 comparable properties and although they had all sold in the first 3 quarters of 07 they are at least 50-120k more with less land or shorter beach width. But the inventory will likely start to fill up in the spring - right now there is very little with many people who let their listings expire and plan to relist in the spring. Carrying the payments, even without income is ok, long enough to sell even if it takes 2-3 years. I am definitely not planning to spend every vacation there, the summers will be great and the slopes are calling for me in the winter :)

    Have until tomorrow night to decide....
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