Real Estate Confidential: What can I buy on Martha’s Vineyard?

12 Isaac Avenue, Oak Bluffs. Alisan Lohan-Conway Properties. — Courtesy Martha's Vineyard Buyer

Weekly chit-chat about new listings, sales or other insider info on the Martha’s Vineyard real estate market, by Fred Roven, Martha’s Vineyard Buyer Agents.

I often receive calls long before a buyer begins the selection process asking “What can I buy on Martha’s Vineyard?” My first response is to tell them to speak to a bank or mortgage broker and determine what they can afford. With building lots starting close to $300,000 and construction costs surpassing $300 per square foot, building a 2,000 SF home for much less than $1 million on Martha’s Vineyard is becoming a challenge. The Oak Bluffs home pictured becomes a good value at $859,000. It is located at 12 Isaac Avenue in Oak Bluffs.

Do not despair, as this is not your only alternative. Finding homes that have a cost-plus benefit can often work for Vineyard buyers. The other photos represent just that type of opportunity. The added value can be seen in a number of ways. You might find a large, expansive barn or garage suitable for trucks and low-traffic small businesses. Possibly even studio space above a garage for an office or game room. You might find a property that can bring in extra income while you live in the main portion of home — possibly a guest house, attached apartment, or rentable space above a garage or in barn. This added income, particularly if the bank allows you to use the income with your application, can bring the unaffordable into the affordable category.

The housing affordability gap — the difference between median home costs and what a family can afford on a median income — is daunting for ownership. And that gap is even broader on Martha’s Vineyard for, I suppose, obvious reasons. As an example, the new house pictured here would have a mortgage of $3,182.53 per month with a 20% deposit, which will get you the best available rate. Obviously there will be a reduction after negotiating the actual selling price, and you must add in taxes and insurance, so probably a good number with which to go for your monthly cost.

The best solution to get a mortgage for not much more cost per month than a quality rental is to save for a 20% deposit. That means close to $175,000 for a family-size home with above-average quality and condition. So what are the possibilities?

The house located at 215 Great Plains Road, West Tisbury is a good example of a property that can house a small, self-contained home business. If you only need room for a few small trucks and an office, this property is perfect for you. Using part of your home as a business also allows you to deduct a portion of mortgage and expenses from taxes, which certainly should be considered in the mix. You will have close to 1.5 acres for privacy and five minutes to Lambert’s Cove Beach, on the oft chance you have any spare time in the summer.

Next is a house and guest house at 68 Pilgrim Road in Edgartown listed for $759,000 . With an additional garage to provide storage and workspace plus a guest house to provide additional income, this property can provide both rental income and expense deduction, which all can be used in your mortgage application. With a mortgage of $2,897 and additional income and deductions, this could be ideal for the Vineyard family. After strong negotiation, the monthly mortgage could be as low as $2,500 with a variable rate mortgage of 7 or 10 years.