People have many different reasons for wanting to buy a second home. Some people want to buy one to generate rental income, some may want to purchase a fixer-upper for their retirement years, and others simply want a second home for their vacation getaways. If you are thinking of purchasing a second home for whatever reason, here are a few things to consider before committing to another mortgage.
1. Research the current market in the area where you are planning to purchase your second. Are homes affordable, expensive or downright cheap right now in the area you’re searching? Look for information on household incomes to home prices to see whether the area you’re searching in has a higher ratio in relation to other areas. This information is especially valuable if you are seeking rental income.
2. Too many people have purchased a second home that is too expensive, thinking they’ll be able to rent it out when they’re not occupying it. But if renting is unfeasible, generates less income than expected, or is downright impossible, then the homeowners are left with a failed investment. Ask yourself if a second home is still a safe investment without rent padding the list of expenses. If the answer is no, then you should seriously reconsider buying a second home.
3. Draw up a list of all the possible expenses involved in purchasing a second home. Some likely expenses to include are property taxes, basic utilities, cost of upgrades/upkeep, insurance and property management services. If purchasing a second home will leave you on a severely tight budget each month, you may want to wait a little longer before making the investment. Consider putting off your purchase until you’ve paid off your first mortgage.
4. Talk to a CPA or tax adviser before you purchase a second home. These people will be able to give you accurate and updated information about loans, interest rates, tax write-offs and so on and so forth.
If you are planning to buy a home, let The Incorvaia Team make the process as easy as possible for you. Call us at 440-879-7130 today!
