Long a summertime playground for the New York and celebrity elite, the Hamptons is regularly lauded as one of the country’s most spectacular enclaves.
Sandwiched between Long Island Sound and the Atlantic Ocean, the Hamptons occupy some of the most sought-after real estate in the world. Located along the easternmost tip of Long Island, the region is celebrated for its unique, tight-knit residential communities, along with its excellent shopping, dining, nightlife, and recreational pursuits, many of which center around the region’s world-class beaches.
Pick a town or hamlet — Southampton, Bridgehampton, East Hampton, Sag Harbor, Montauk — and you’ll uncover a new definition of coastal luxury with few if any, equals.
Stick around long enough and you might start rubbing elbows with the rich and famous. It’s little wonder that the region serves as a significant draw for second-home buyers, both well-known and unfamous alike.
If you’re one of those interested parties, someone who’s in the market for a second residence set in an incredibly idyllic location, the Hamptons has plenty to offer beyond just an opulent, high-end lifestyle.
From vacation homes to investment properties to compounds that can eventually transition into a forever home, there’s a surprising amount of flexibility for those seeking a second-home investment. And if you’ve ever considered leaping headfirst into the market, now is a great time to start living your best life.
Let’s explore four tips for buying a second home in the Hamptons.
Determine your second-home goals
One of the most common mistakes for luxury second-home buyers is purchasing property without thinking about how the home fits their lifestyle now and in the future.
Second-home purchases typically stem from one of three basic motivations:
◽ As a family getaway for vacations and holidays or as a future primary residence
◽ As an investment to renovate and sell for a profit or to hold and use as a rental income generator (short-term or long-term)
◽ As a combination of both by leveraging the deal now for financial gain, paying off the mortgage, and then keeping it as a primary residence later free and clear of any loans
Determining your goals early in the homebuying process directs your property search to deals that work for you. Similar to acquiring a primary residence, the more you can identify what you hope to achieve, the more focused your Hamptons home search.
For example, your personal tastes might gravitate toward something secluded and rural. However, if you’re set on your Hamptons home also generating a healthy amount of income, you should consider listings near more popular destinations for vacationers and long-term renters.
Conversely, suppose your plans call for rental income first, then transitioning the property into a permanent home later on, perhaps upon retirement. In that scenario, you’ll need to balance what produces the rental income you want now versus your needs three, five, or ten years down the road.
Location is a critical factor
Every home search — be it your first, second, or fifth property — begins and ends with the right location. The principles of real estate are built upon it. More so than with locales in New York and elsewhere across the country, the Hamptons demands that the location be front and center of your home search.
Arguably, location is the distinguishing characteristic of the Hamptons. The individual towns, villages, and hamlets that populate the area feed into its aura as a coastal retreat fit for any lifestyle and sensibility.
To be sure, there are over 20 different enclaves. Each community possesses its own unique characteristics and selling points. There are many choices for second-home buyers.
For example, consider the Hamptons’ main population centers, seven communities in all:
◽ Amagansett: A family-friendly beachy feeling neighborhood with easy access to the beach and an excellent dining scene
◽ Bridgehampton: For those who love the sporting life, including equestrian pursuits and an unapologetic country club atmosphere
◽ East Hampton: One of the most popular hubs of activity at the heart of the Hamptons, come here for upmarket shopping, exquisite dining, crowd-pleasing entertainment, and plenty of sophistication
◽ Montauk: The Hamptons’ easternmost outpost, Montauk is a bit like Woodstock, except with an oceanfront setting, surfboards instead of fretboards, and a hint of refinement to its bohemian culture
◽ Sagaponack: An exclusive, upscale hamlet ideal for those who value privacy, space, and solitude above all else
◽ Sag Harbor: Water is central to life in the Hamptons, and it matters most in Sag Harbor, where the culture is a throwback to 19th-century fishing villages
◽ Southampton Village: Perhaps the most dynamic of all the Hamptons communities, gorgeous homes, fine art galleries, a vibrant nightlife, and seaside location converge to make this the height of the luxe coastal lifestyle
◽ Watermill: a charming pass-thru hamlet with gorgeous waterfront estates offering plenty of waterfront activities on coveted Mecox Bay
Indeed, you can’t miss any of the above neighborhoods or smaller communities, such as Shelter Island, or Wainscott. However, location is a key factor in what you hope to gain from your second home here.
During your search, recognize trendy summertime hot spots will carry a decidedly different vibe during the off-season. The seasonality could also narrow your rental window.
Of course, if it’s a permanent residence you’re after, select the home and place where you will be happiest. After all, it’s a 45-mile drive from the western end of the Hamptons to its easternmost point. Wherever you choose to buy, you’ll be close to it all.
Budget accordingly
It’s no secret that Hamptons real estate is expensive. From New York’s financial elite to Hollywood celebs and execs, an aura of astronomical opulence and wealth has built up around Long Island’s most exclusive playground.
What many don’t realize is that despite the headline-grabbing eight- and nine-figure coastal estates, there’s an abundance of relative affordability scattered throughout the South Fork region. With that affordable luxury comes a wide array of property types. It’s not just traditional single-family homes that are available. You can also find condos and raw land, including parcels with multi-development opportunities.
In fact, the sheer number of opportunities available to even the most calculating buyer can prove overwhelming. Along with location, your budget will further focus your property search. Come to the table with a funding range in mind and a knowledge of what that price range will buy you.
Half a million to a million will get you a well-appointed condo or decent fixer-upper. Up to $5 million and you’re looking at comfortable accommodations in quaint neighborhoods across the majority of Hamptons villages and hamlets. The luxury increases significantly from $5 million on up, especially as you move closer to the coast.
If you want to build your second home or develop a portfolio, land can be had at almost any price north of $500,000.
When forming your budget, remember to account for the various taxes and fees associated with several of the Hamptons’ tonier enclaves.
For example, in addition to the survey fees and the employment of a local real estate attorney typical at this level of luxury, other costs include:
◽ Mansion tax: a 1% levy added to properties purchased above a $1 million threshold
◽ Peconic Bay Region Community Preservation Fund Tax: a 2% tax is applied to East Hampton, Riverhead, Shelter Island, Southampton, and Southold homes for the preservation of those area’s bodies of water and open spaces
Homeowners are eligible for certain locally specific deductions as well. For example, the deductions for East Hampton, Shelter Island, and Southampton are $250,000 on the improved property and $100,000 on unimproved land. In Riverhead and Southold, the deductions are $100,000 on the improved property and $75,000 on unimproved land.
Plus, up to $750,000 in mortgage interest deductions are available for your second home, depending on its intended use. There is a $500,000 exemption from capital gains should you transition the second home into a primary residence, and then turn around and sell it.
For assistance with your Hamptons home budget, it’s worth turning to a trusted real estate professional and a real estate attorney or financial advisor specializing in high-end real estate transactions.
Exercise patience
The Hamptons real estate market can be a daunting experience for even seasoned home buyers. There’s nothing pedestrian about choosing a home here. Each choice you make — from location and budget to square footage and acreage to the wish fulfillment you seek from the home’s interior — reveals a new pathway of luxury.
Even with all of that variety at practically every price range and the area’s constant national fame, the market itself remains notably insulated. Local knowledge, or lack thereof, can prove the difference between a fantastic deal and a lackluster transaction.
Though the market is still hot, it’s worth taking a measured approach to your second-home purchase. It’s also extremely valuable to have a knowledgeable broker at your side to help you navigate the ins and outs when buying your second home.
Partnering with an experienced real estate broker ensures your access to the finer points of a dynamic and ever-changing market. From understanding where and when to buy to negotiating deals that ensure you get the most from your investment, the right professional will provide peace of mind and confidence in whatever property you pursue.
If you’re ready to explore the best real estate in the Hamptons and are looking for a trusted partner to help you find your second home, contact Deborah Srb today to begin your second-home-buying journey.
From coastal Southampton real estate to Sag Harbor homes for sale, let Deborah’s years of experience and expertise be your guide to the spectacular seaside luxury of the Hamptons real estate market.
