What to Consider Before Buying a Second Home
According to the National Association of Home Builders (NAHB), there are 7.4 million “second homes” and they’re mostly found in Florida, California, New York, Texas, Michigan, North Carolina, Arizona, and Pennsylvania. These second homes are mostly used as vacation getaways, rental properties, or long-term investments. Here’s what you should think about before buying your second home.
Never Buy on a Whim
Never go on vacation, fall in love with a home, and immediately try to make that dream come true. Do thorough research on your potential purchase and check your finances. Buying a second home impulsively will burden you financially and leave you with a home that becomes less and less attractive.
Decide which Home Suits your Needs
Determine your needs first, then use that as the basis for picking the right type of home. Assess your lifestyle, and future plans and get the home to match. Think about how much time and effort you’re willing to devote to maintenance. Condos are a good choice if you don’t want to do year-round maintenance and plan to use the home occasionally.
If you want your second home to be a weekend getaway, look for one located within a day’s drive., Look up for homes for sale in Texas and Arizona, there are a lot of good vacation destinations there. If you want the option of retiring to your second home, check its accessibility to leisure activities and healthcare services. Planning on buying the second home then selling when prices peak? Get one where the market is hot.
Get Familiar with the Area
When you’ve decided on a place to buy your second home, get to know it better. Don’t finalize your decision until you’ve seen it beyond a tourist’s point of view. Visit the area during the off-season and get a feel for the neighborhood. Ask locals how they feel about life there, and what advice they’d give to anyone moving to the area.
Do the Math
Sometimes the most desired locations can be prone to forest fires, hurricanes, or floods. Get to know the insurance costs if the area you’re looking at has these risks. As for maintenance, set aside at least 2 percent of the home’s value every year for costs of repairs and upkeep.
Finance it Wisely
Like you did with your first home, don’t get the first mortgage offer you see. As home buyers the second time around, you should know that the housing and mortgage market always changes. Take the time to look for the best mortgage. Renting out your second home is a good way of financing its purchase. Check first if the state allows renting out your second home. Get familiar with the Fair Housing Act and laws on landlord/tenant relationships, and know your tax obligations before renting it out.
You may have a good idea about buying a second home beyond your first, but don’t do it blindly. Before buying a second home, carefully weigh whether the need is worth the investment of time and money. You should only consider it if you can truly afford it, or if it’s a good investment that can provide rental income.