"lake martin, alabama" By Gingher on Flickr

During the boom years of soaring prices for Lake Martin waterfront homes, many people who loved the lake and wanted something more than a weekly rental have settled for a yearly lease.

For some it was a fairly easy decision, since the monthly rent amount was only a fraction of what their payment would be for a comparable home on the water.  No more.  I run into people all of the time that pay $1,500 to $1,800 a month to rent a Lake Martin cabin.

Now, with rates at historic lows, and lots of pressure on sellers on Lake Martin, the rental excuse is just about gone. Consider a recent example of numbers that I ran for another agent:

Currently, his client is paying $1,250 a month to lease a cabin.  The client is fearing that the lessor is going up on the rent. So what kind of home could he buy for that much per month?

If you figure that you bought a deeded home for $325,000, and put 20% down, that would give you a loan amount of $260,000.  Bankrate.com tells us that right now in Alabama, rates for 30 year fixed loans are at about 4.875% – that gives a monthly payment of about $1,376 per month.

Ha – you say, renting is still cheaper.  Wait a minute – have you considered the after tax affect?  Yes, second home mortgage interest is deductible!  In the above scenario, you would pay about $12,588 in the first year.  So if you were in a 20% income tax bracket, the effect is a $2,518 per year or $210 per month reduction in tax.

$1,376 – $210  = $1,166 per month, or less than your cabin lease of $1,250.

True, you would probably have insurance expense that is greater than your renter’s insurance right now.  And true, you would have to pay property tax.  But I think that would pretty much wash out with the tax savings, to say the least.  Plus you would be OWNING a Lake Martin home instead of renting. You would never have to worry again about increases in rent, or whether they are going to renew at all.  You will be buying low – so why are you waiting?

You can’t find a good cabin on a big, private, wooded lot in a great area?  Wrong.  See more info here!

You do realize that you’re out of excuses, right?