Once again, there is good news and bad news.  First, the bad news: the challenge of buying a second home has definitely become more complicated for many Americans.  That’s according to the National Association of Realtors who recently released a statistical analysis for all of 2024. 

There are at least two culprits according to the NAR.  For people who haven’t been luxuriously living on an uncharted island somewhere without modern communication, those two complicating factors come as no surprise: rising home prices and rising interest rates.  They report that the median home price is now $435,000.  That represents a 39% jump since before the pandemic.  Wow, 39%!

 Perhaps worse (if you’re a borrower), mortgage rates have basically doubled during that period.

 Of course, the focus of this blog has always been how markets affect not only home buying, but particularly, buying your second home.  I mean, it’s really like knocking over dominoes.  A rise in starter home prices puts price pressure on higher-end homes.  In turn, it affects price points in the second home housing market.

 Did I say there was good news?  Oh yes, the good news for potential vacation home buyers is the indy-co concept.  Let me elaborate, because, second home shared ownership is also a solution for existing second home owners wanting to reduce their cost of owning a second property.

 If you’re unaware, indy-co, which is short for independent co-ownership, is emerging as a viable and attractive alternative to traditional second home ownership. This model, which involves multiple buyers jointly purchasing and owning a vacation property, offers a path to affordability and financial flexibility in today’s challenging second home real estate market.  Not to fear, there is expert guidance waiting to assist.

 Meanwhile, this is co-ownership that is not to be confused with purchasing from one of those portfolio enterprises.  Whether you’re a potential vacation home buyer or an existing second home owner, this is true independence.  Let me explain why indy-co is gaining traction among both parties.

 The Allure of Indy-co for Buyers

• Reduced Financial Barriers: The most significant advantage is the dramatic reduction in upfront costs. Instead of shouldering the burden of a 20% down payment on that aforementioned median home price of $435,000, buyers can acquire a one-eighth interest for a small percentage of the cost. Even with a higher-end $2 million dollar home, well, the math is easy!
• Circumventing High Interest Rates: With the indy-co model, buyers purchase their share in cash (hey sellers, are you paying attention?).  This eliminates the need for a mortgage and the associated interest payments.  So, even if mortgage interest rates have indeed doubled, indy-co renders those rates irrelevant.
• Shared Ownership, Shared Responsibility: Indy-co spreads the financial responsibility of owning a second property among eight co-owners. This includes not only the purchase price but also ongoing expenses such as property taxes, insurance, utilities, and maintenance.  This is great news considering that second homes are statistically used less than 50 days a year.  Our own research indicates that it might even be less than that (it appears life really does get in the way sometimes).

So, for potential Buyers, there is indeed plenty to think about and relish.  But what about Sellers (or, existing second home owners)?  What’s in it for them?  Well, let’s see.

Indy-co as a Solution for Existing Second Home Owners

• Debt Elimination and Reduced Costs: By selling 7/8ths of their property, existing second home owners can potentially eliminate their mortgage debt entirely. Then, going forward, the shared responsibility for ongoing expenses can reduce the monthly cost of owning a second house by as much as 87%!
• Continued Use and Enjoyment: Sellers who opt for indy-co aren’t entirely parting with their cherished second home. If they choose, they can retain a one-eighth ownership interest, guaranteeing them continued access and use of their beloved vacation property.

Our model for streamlining the Indy-co Process

Our company, divieight, advocates in favor of a business model designed to make the transition to indy-co seamless and beneficial for both buyers and sellers. Our comprehensive suite of services includes:

• Matching second home buyers with compatible preferences through a digital platform
• Managing all aspects of the transaction: including custom document preparation
• Legally reviewed operating agreements: outlining everyone’s rights and obligations
• Worry-free property administration: taking care of bill payments, maintenance, etc.

By facilitating communication, ensuring legal compliance, and handling ongoing property administration, we remove the complexities and potential headaches associated with co-ownership. In short, we allow owners the leisure of simply enjoying their vacation home.

You see, I told you there was good news.