Have you always dreamed of having a quaint cottage on the lake? Perhaps being steps away from a sandy beach and the ocean's breaking waves is more your style? Whether you have fantasies of snowy slopes or swinging hammocks, we are confident that you have at least fantasies about what it would be like to own a second home.
For many people, the idea of owning a second home or a vacation property is swiftly squashed when the weight of reality sets in. What if we were to explain to you why now is the ideal time to buy a second home?
Get on the property ladder
If you live and work in a large metropolitan area like Manhattan or San Francisco, it may seem impossible to scramble onto the property ladder. With Manhattan condominium prices going for $1714 per square foot in the first quarter of 2021, it is no wonder that younger folks are looking to buy their second home first.
Buying your second home first entails renting your primary residence in the city and purchasing another home in a location that is within your financial means. Rather than being merely an investment property, the second home is used for vacations or short-term rentals.
You have built up equity
We recommend that you make friends with a knowledgeable mortgage broker. With the right knowledge, it may be possible to use the equity from your first home to purchase another. This is an extremely viable option for those that have about 40% equity in their primary residence. While you may not have been paying down your mortgage for very long, if house prices in your area have skyrocketed in recent years, then it is certainly worth checking out.
You are looking to retire
Many retirees plan to downsize or move out of the city as soon as they hang up their hats. However, it is worth keeping a keen eye on property prices and listings even if retirement is years away. This will enable you more time to find your dream property where you can be living on the water. Moreover, you can start to make connections in the area to make your transition smoother when the time is right.
Take advantage of low interest rates.
Mortgage rates are currently low, whereas property prices, particularly for vacation homes, are skyrocketing. Now that working from home and hybrid work schedules are more the norm, people are increasingly looking to move out of expensive metropolitan areas, driving up prices. You do want to ensure that you could still comfortably pay the mortgage if interest rates were to increase; however, borrowing money right now may significantly improve your financial future.
Diversify your investments
You might have stocks, bonds, and a healthy retirement pension. However, any financial planner will preach that a degree of diversification is needed to protect your fiscal future. You can earn significant equity in your second home as property prices increase, and you could rent out the property short term. You may also consider it a saving if your family uses the property rather than going away on vacation.
If you have always dreamed of owning a second home, then now might be the ideal time. Talk to the experts and run the numbers. You may find yourself enjoying your second residence before you know it.
