Buying a second home is an enticing investment. It can either be a relaxing retreat in place you love. It can also be an income-generating asset. Here are six tips to help you make the right decisions.
Plan ahead
As you did when you bought your first home, do your research and determine the type of property you’re looking for. Consider your plans well− it is going to be a vacation home or perhaps even a rental? Can you afford to make the purchase?
Learn more about your desired location
Once you know what you’re looking for, it’ll be easier to pick out a location. Your second home could be in a city or town you love to visit once in a while. It could also be on a gorgeous mountain location or an idyllic coastal setting.
Consider your plans for the property. Things to bear in mind include access to amenities, services, and utilities. How far is the nearest supermarket or hospital? Are there any good schools located in the area? Does it flood in the vicinity?
With proper research, you’ll be able to figure out if your second home has rental potential, if you can benefit from any tax cuts, and if you need to get additional utilities and insurance.
Hire a local real estate agent
A local real estate agent offers guidance, expertise, and in-depth insight into the community you’re considering buying into. Working with a realtor also allows you to tap into a vast network of real estate professionals, including builders and contractors, so you can get the home you want.
Do some research about tax benefits
If you’re going to purchase a second home, you should take advantage of tax benefits available to you.
For example, you don’t have to pay rental income tax if you’re only renting out your property for less than 15 days a year. That said, you can’t deduct maintenance expenses. It’s vice versa if you rent out your property for 15 days or more.
Secure financing
Since you are purchasing your second home, you’re unqualified to get certain loans (such as the 203k, VA, and USDA loans.) That said, there are plenty of options out there, so shop around for the deal that works best for you.
Additionally, make sure you can shoulder two mortgages. To qualify for a second-home mortgage, you should be capable to put 10 to 20 percent on down payments. An acceptable to outstanding credit score, as well as documents that prove your financial capability, are also needed.
Don’t buy on impulse
Many home buyers fall into the trap of buying a second home without proper research. And such ventures can lead to heavy consequences. Resist the urge to invest on a second home simply because you feel like it (or you’ve fallen in love with a place.)
Learn more about buying a second home
Are you looking for a vacation home in San Mateo with stunning coastal views? How about an investment property in Silicon Valley with tremendous rental potential? Get in touch with us today at 650-489-6251 or info(at)davidandsunny(dotted)com to get started.