Demand for a second home remains wholesome regardless of a gradual housing market. With homebuyers enjoying a gain in many markets, now might also be the time to buy that second home that you’ve been thinking about. Whether you’re dreaming of a paradise, retirement home, or profit, take note of these pointers for a clever investment:
Resist the urge to impulse-buy
Don’t come back from holidays with the keys to a new house without having totally researched your purchase first. If you purchase on a whim, you may end-up with a second home that you can’t afford or that doesn’t fit to your needs.
Evaluate your wishes and long-term goals
Be practical about what kind of second home suits your lifestyle. If you’re searching for a weekend getaway, staying within a day’s drive from your primary home would be a right move, if you want it to be your retirement home someday, verify the home’s accessibility and look for health care facilities near the area.
Get to know the vicinity before buying
Even if you’ve been visiting the identical holiday spot for years, you need to comprehend the area from a non-tourist standpoint, if you plan to purchase a house there. Visit the place off-season, and talk to locals to know the area better.
Decide what kind of home is right for you
Think about what amount of time and money you’re willing to dedicate to maintenance when determining between an apartment and single-family home. Apartments are an accurate preference for customers who are solely looking to use their residences on occasions and don’t choose to deal with year-round maintenance. But if you don’t want to sacrifice your privacy, stick to a single-family home.
Look for mortgage options
The market is constantly fluctuating, so don’t just go for whatever terms your first home lender is offering you. Look for other available deals before choosing the best deal.
Determine additional expenses
Don’t exclude the insurance and maintenance, when adding up the total value of your second home. Some of the most demanding areas are more prone to hurricanes, floods and forest fires. So, insurance costs in those areas can be more expensive. Do a thorough research and accumulate multiple insurance quotes before making an offer. For maintenance, a suitable rule is to keep 2 percent of the home’s value per year for upkeep and repairs.
Share ownership to cut down on costs.
In case, your dream vacation home is not suiting your budget, if it’s not feasible for the amount of time you are going to spend there, you can consider sharing your resources with friends or relatives, so that many people can enjoy a getaway for a fraction of the cost.
Look into tax benefits
It’s obvious that if you own two houses, you have to pay taxes for both of them. However, you don’t have to pay taxes on rental income if you rent out your home 15 days a year. Anything more than 15 days a year will have to be reported as income, but you can deduct expenses like maintenance and cleaning.
Rent out for an extra income
If you need another source of income, even if it is for your monthly mortgage payment, renting out your second home can be a feasible option. But remember, being a landlord comes with greater responsibilities than many people realize, so familiarize yourself with the landlord/tenant laws and Housing Act policies before renting out your second home.