06 Oct Buying a Second Home: Are You Ready?
Life is pretty good when you are successful and making good money. Your mortgage isn’t even an issue anymore, your income is steady, you have great credit, and you are leaning towards exploring profitable opportunities in the housing market. You have the cash and the credit so why not take a little risk if it means increased financial gains?
If you want to expand your real estate portfolio, purchasing a vacation home or investment property may be something you are interested in pursuing. But making this type of decision should be done with serious consideration. Ask yourself a few questions first before spending your money.
HOW TO KNOW YOU’RE READY TO BUY A SECOND HOME
If disposable income describes your financial situation, then you are ready. Instead of spending your extra cash on frivolous purchases, you rather invest in real estate
Beyond money, age plays an important role when buying a second home. When you are older, you have more free time to devote to a second home.
WHAT TO CONSIDER BEFORE BUYING A SECOND HOME:
The level of commitment?
You must analyze your personality realistically. Do you have any personality traits that would make such a purchase more of a liability than an asset? Purchasing a second home will give you responsibilities that you may have no desire to for.
How will this impact me financially?
Money available to spend doesn’t necessarily mean money to blow. So many expenses come with owning a second home, and you don’t want all your money tied up in something that it can’t easily be pulled out of. A turnkey may be your best option, low cost that generates consistent cash flow.
The Cash You Have Available
Can you handle putting down at least 25 percent of the purchase price for a second home? Anything can occur, and you don’t want to be financially strapped when an emergency occurs.
Maintenance costs are always that cost that sneaks up on you, growing more expensive as time goes by. Factor in all cost so that you know what you are getting yourself into.
What are the tax implications?
Nobody wants trouble with the tax man – different rules apply for second homes and vacation homes, Seek the counsel of your mortgage broker to understand better the tax implications of buying a second
THE NEIGHBORHOODS AND AREAS FOR YOU
Location plays a significant role in any real estate purchase. It affects both the price you pay for your home the selling price you can ask for if you chose to sell. Pick a location that will benefit you in the long run.