While having two or more homes seems natural for the very wealthy, you might be surprised at how much sense it makes for almost anyone to own a second home. Real estate is an excellent investment and tends to hold and gain value time and time again. Read on and learn why a second home is far from an extravagant purchase.
Affording a Second Home
When it comes to buying a second home, it's vital that you examine your financial situation before you begin looking at homes. Just like all good investments, you may have to spend money to make money. In many cases, a second home purchase will mean dealing with two mortgages simultaneously. When you purchased your primary residence, you probably spoke to a lender to find out how much you can afford — and how much you can reasonably expect a lender to loan you. Unlike your primary residence, a second home may be viewed as less of a risk. After all, the equity in your present home can serve as collateral.
Along with an additional mortgage payment, don't forget to factor in other costs associated with a home purchase. Some costs may exceed that of your primary residence, depending on the location. For example, a home in a coastal area may hold awesome rental potential, but you can also expect the property taxes, maintenance and homeowners' insurance expenditures to be higher on the coast. Also up for consideration is the wear and wear on your home if it's on a rental program. You might need to do more repairs and updates if your home is popular.
Location, Location, Location
What makes an area attractive for a second home can vary. Before you buy, speak with a local real estate agent about locations that are sure to bring in renters.
If your family enjoys a particular location, chances are others will, too. You want to make sure you can enjoy your home's location, too, so consider how close to attractions you want to be. Another issue is how long it takes to get to your second home. That factor can affect how often you use it and how quickly you can respond to problems at the house.
Take a look at not only area attractions but to other things vacationers want like grocery stores, restaurants and more.
It's important to work with a real estate agent in the area of the second home. They have insider information on zoning, coming attractions, neighbourhood values and more.
To get started, contact a local real estate agent.Share