Whether you are buying a second home as a vacation getaway or as an investment property, it’s advantageous to do some research on the house, its location and the benefits of having a second home. Here are some things to consider before plunking down your hard earned cash.
Type of home
Think about the type of home that is suitable for your family’s need. The choices for second homes can range anywhere from used, new developments, land-builds, modulars, townhouses to condos. It depends on what you are looking for, how much you can spend and how you want to maintain the home. For instance, used homes that are too old that may be cheaper but require more maintenance. New developments and land-builds can be costly in terms of time and money. They may also take a while to complete. For low maintenance seekers, townhouses and condos might be the best bet price wise but usually don’t yield the great return on investment.
Timeframe for securing the home
If you are looking to obtain a second home within a few years (less than 5 years), going for a used, modular, townhouse or condo is a good choice. These options don’t require a long wait to move in. In most cases, these properties are already move-in and may already come furnished. If your timeframe is longer, consider looking for new developments and land-builds to customize your second home exactly to your specifications.
Saving for the down payment
Start saving now for your down payment. Seek help from your financial advisor at your local bank on starting a house fund. High-yield money market accounts in the short term, while CDs and annuity accounts will work in the long-term. Starting far enough in advance will give you enough savings to get exactly the type of house your family needs. Work extra jobs to earmark funds to your second house fund.
Research the area you want to purchase in. Homes in resort areas, beach fronts, golfing make communities can be pricier than their counterparts. Research lists of desired places to live. Examine the cost of living concerning food, entertainment, medical and utilities. Investigate specialized communities such as retirement or active living communities. Homes in these places give you additional services like clubhouse memberships, communal meals and transportation. Make several visits to your desired area before purchasing the home.
Also, when considering location, be mindful of the effects of the weather on some properties. For instance, in beachfront areas are susceptible to heavy rains, hurricanes and flooding that could damage properties. The worst scenario would be to lose a second home to a natural disaster.
Maintaining the second home
Think about how you will maintain the second home. For a vacation home, you might consider having neighbors look after it while you are away. Will you rent it out while you are away? For resort areas, renting the home in season can be very lucrative and can raise enough funds to pay the mortgage off faster. For investment properties, you may need to hire a management company to help with the upkeep and rent collection.
The distance of the second home from your primary residence should also be a consideration when purchasing. It’s easier to get to a second home if it’s closer to your primary residence. Avoiding costly plane rides and the demands of traveling long distances, may contribute to a better experience with the second home.