Second home buyers usually start with the view. I start with drive time, winter access and insurance, because those are the things that turn a dream cabin into a headache. Second homes also have their own loan rules and rental limits. Here's the checklist I use with clients looking at the mountains or any vacation property.
The short answer
A second home is one the owner uses part of the year for personal stays. Lenders treat it differently from a primary home and from an investment property, so the buyer's plan for renting it matters. Before falling in love, check insurance cost and availability, who plows the road, water and septic, internet, short-term rental rules, property taxes and any town transfer taxes. Then pick the house.
Step by step
- Ask how they'll use it. Personal only? Rent when they're away? Mostly rent? The answer drives the loan type and which rules apply.
- Send them to a lender early. Second home and investment property loans have different down payment and occupancy rules. The lender decides.
- Get an insurance quote before the offer. Wildfire risk can raise premiums or limit options in the mountains. See wildfire insurance.
- Check access. County-plowed road or private road? Who pays to plow? Steep driveway? See mountain winter access.
- Check water and septic. Well or public water? Septic age and permit? See wells and water rights.
- Check internet and cell. Confirm service at the address, not the town.
- Read rental rules. Towns and counties set short-term rental rules, licenses and caps. Some licenses don't transfer at sale. See short-term rental rules.
- Check taxes and fees. Property taxes by district and any local transfer taxes. See Colorado property taxes.
- Plan for the off-season. Who checks the house in winter? Heat tape, frozen pipes, snow removal. Lock-and-leave homes reduce the work.
Second home checklist
| Check | Why it matters |
|---|---|
| Insurance quote | Can change the budget or the deal |
| Road and plowing | Winter access |
| Water and septic | Big repair costs if wrong |
| Internet | Remote work |
| Rental rules | Income plans |
| Taxes and transfer fees | Annual and closing costs |
| Altitude | Comfort for the family |
How to explain it to your client
"Before we fall for a view, let's check the boring stuff that makes a second home work: what insurance costs, who plows the road, whether there's a well and septic, and whether the internet works at that address. And if you plan to rent it out, the town's rules matter a lot. Some towns limit rentals or make licenses start over when a home sells. Once those check out, we pick the house you love."
Watch-outs
- Occupancy honesty. The buyer must tell the lender the truth about how they'll use it.
- Rental income isn't guaranteed. Rules change. Don't promise income.
- Insurance can surprise. Get a written quote early.
- Health and altitude. Suggest a few nights at elevation and a doctor's advice if they have concerns. Don't give health advice.
- Not tax advice. Second home tax rules go to a CPA.
Further reading
- Buying a second home in the mountains near Denver on kennaluxuryrealestate.com
- How to get the most out of a second home on kennarealestate.com
This is training for real estate agents. It isn't legal, tax or lending advice. A licensed loan officer sets loan terms. Check with your managing broker.
Questions
Is a second home loan the same as a rental property loan?
No. Lenders treat them differently. The buyer's use plan decides.
Can my client rent out a second home?
Maybe. Lender rules and local rental rules both apply.
What's a lock-and-leave home?
A home with low upkeep, often with HOA services, that's easy to leave for weeks at a time.
Do mountain towns charge transfer taxes?
Some do. Check the town before writing an offer.
What should we check first?
Insurance, access, water and septic, then the house.
Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.