Buying a Second Home

Written by Posted On Sunday, 14 January 2018 05:22

So, you are in a financially stable position in your life, and you’re considering investing some idle money into a second home. Perhaps you have a favorite vacation spot that you'd like to spend more time in or you see investment opportunities that can be seized.


Maybe a beach house, a farmhouse, or a city condo suits your fancy. Maybe you'll choose to rent it out. Maybe you won't. Any way you go, you should prepare a little bit before you leap.


Before making a decision, it is essential to plan out whether you will be able to cover the costs, and whether it will be a burden on your finances or not. Calculating pros and cons of buying a second house is the first step in purchasing a second piece of real estate.


If you’re thinking of taking the plunge into multiple home ownership, here are some pre-purchase factors to take into consideration which will help in deciding to buy a second house or not.


Will It Be Useful?


A second house is perfect for people who don’t like staying idle at one place. If this describes you, are you the type that would prefer a lifetime of going to vacations to that second home, or would you prefer a different vacation spot for every holiday? If it’s the latter, then a second house won’t satisfy and you'll end up selling it sooner than later.


Secondly, any person considering buying a second house needs to ask themselves if they are responsible enough. Sounds funny but buying this would mean that you will now have two properties that need care. If it’s a beach house, for example, there will most likely be a lot of maintenance due to the high tides/oxidation, etc. so you will have to be ultimately responsible of taking care of two houses since the day you buy it. If the prospect of maintaining a second home bothers you, you might prefer a condo. Your maintenance fee does all the work for you.


Financial Implications


If you are buying a second property for your own family, it is critical to assess whether the cost of the house is worth the time you would spend on the property on vacation there. Putting aside the initial cost of the purchase, there are also a lot of additional costs in maintaining a second home, including various types of insurance, guard/housekeeper costs, etc.


If you are buying a second home with the objective of generating rental income, then you have to assess whether you would be able to cover the cost of the house with the rental income. Renting out minimizes maintenance expenses, but it also adds additional taxes as well. All of these costs need to be considered to get a clear picture of the investment.


So you have made the decision that you have enough financial resources to purchase a second house. Now comes the steps you should take to ensure that you buy the best home. For that you must:


Create Clear Goals


Once you have set a clear objective on what kind of house you are looking for, it will narrow down your search to the most relevant ones. For example, if you are looking to buy a retirement home, it would be a good idea to invest in a house with easy access to various amenities and healthcare facilities nearby.


Determine Your Location


Now is the time to find a location where you want your second house to be. You have to be decisive on whether you want it to be in a destination you will only be able to reach through a plane/ rail/ bus trip or just a short distance from your current house.


Set A Price


Before buying any home, you must do some market research and find the property prices in the area you are hoping to buy in. Then you have to define your price range according to your financial budget.


Hire A Real Estate Agent


Instead of going out on a whim and buying whichever residence you like first, it is helpful to hire a local real estate agent.


Not only does a real agent have a knowhow of the area and its pricing schemes, but they will also be more able to find you a house which is best suited to your requirements.


Get To Know Your Surroundings


Once you find a house which fits your requirements, get to know the area. Talk to the people living nearby, ask them questions on the community and whether it has any underlining problems which would be beneficial for you to know beforehand. Apart from that, also make sure the area has all the amenities that are important to you.


After you go through all the steps and are satisfied with the locality, price, house, then you can go ahead and make a successful second home purchase.

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