Fall has arrived and there’s a lot to look forward to, but this past summer has been an exciting ride.
From the start, I knew that the summer held two fishing trips to Alaska – my first two Alaska fishing trips ever.
What I didn’t know is that I’d also have leg surgery and then purchase a house on Lake Almanor, a dream I’ve had for many years. I wasn’t sure I’d ever get Linda to go along with the idea.
The fishing trips were great and I’m almost completely healed from surgery. I’m grateful for my good fortune. The house at Almanor is the most exciting event of all.
It was mid-June when Linda and I decided to look at lake-front properties on Almanor. Our agent showed us just about every house on the lake under $1.3 million dollars. I concluded that in order to afford a home, it would have to be under a million.
We had most of that in the bank, some anticipated income and a home equity line of credit of our primary residence. We made a $950,000 offer on a house listed for $1,050,000 and they countered at $975,000. We accepted the counter and began inspections.
The house was nice, but had its flaws and as the inspections continued we began to have our doubts. Not only was the house in poor condition, but a western exposure and a steep incline to the water discouraged Linda.
We decided to exercise our right to withdraw.
Another house came on the market. The price was over our limit, but I told Linda we could figure out how to afford it. I knew in my guts that the house would sell quickly and I didn’t want to experience the pain of failing to make a solid offer and losing out on this rare find. After much debate, we made an offer and it was accepted.
I was ecstatic about our luck in finding this house. We could afford to buy it, but could we afford to own it? We closed escrow on about August 1. After consulting with my accountant and attorney, I decided to consider several options for owning the property and holding title.
My accountant believed that I should make the house a rental and take advantage of the two weeks per year that I could stay in the house. This option would be best if we wanted to get the most out of our money. But, I wanted to be able to stay in the house a couple months out of the year – not two weeks.
My attorney suggested creating an LLC, but he wasn’t sure about our ability to make the house a rental and also gain more time on site. An LLC could be a partnership, but the house would still end up being a rental – limiting personal use.
There was a posible Trust situation that would allow Linda and I to use the property as much as we wanted, but we would have to committ the property for our life time. I decided not to look further into that idea.
Another option would be to find a partner, get some of our money back and have somebody who would share in the expenses. I’ve been in many partnerships, but never on a vacation home. Ultimately, Linda and I have chosen the partnership route. We haven’t closed the deal, but it looks like we have found our partner. I’m happy with this plan and financially it is definitely a good option. We are in the process of creating a parthership agreement that defines how the property will be shared.