Do you think you might want to buy a second house to go along with the one that you already own?
It’s not the worst idea in the world! More than 7 million Americans own a second home, with many of them using their second homes as vacation or rental properties.
A large percentage of these second homes are located in Florida. But many people also buy second houses in Arizona, California, Massachusetts, and New York.
Before you start looking around for a second house, though, you’re going to want to make sure you’re in a good position to do it. You’re also going to want to keep a few tips in mind when you start your househunting search.
Here are six tips that you can use when you’re shopping around for second homes, either in your area or in another state.
Begin by Thinking About Why You Want to Buy a Second Home
The first thing you should do when you’re considering buying a second house is sit down and think about why you want to do it. Is it because you:
- Are on the brink of retiring and want to buy a home that you’ll eventually move to for good?
- Want someplace where you and your family can spend long weekends and vacations?
- Have extra money that you want to invest wisely?
You should not simply buy a second home on a whim because it sounds like a fun thing to do. You should have a great reason for wanting to do it.
Buying a second home will, in all likelihood, have at least a little bit of an impact on your financial situation. You want to be sure that buying the home will be worth it.
Consider Whether or Not You Can Afford to Do It
If you decide that you do, in fact, have a good reason for wanting to buy a second home, the next order of business will be to see if you can actually afford it.
If you have a small fortune saved up in the bank and can buy the home outright, that’s great. But if you’re going to have to take out a mortgage to buy it, you’ll need to crunch the numbers to be sure you can afford to take on an additional mortgage at this time.
Remember that you’ll need to pay more than just the mortgage when you buy a second home, too. You’ll also have to pay for:
- Property taxes
- Homeowners insurance
- Maintenance and repairs
- HOA fees
It’s easy to get in over your head when you’re buying a second home. You might think that you can afford it, but after running the numbers, your calculator might suggest otherwise.
Make Sure You’ll Be Able to Qualify for a Mortgage
If you didn’t have any trouble qualifying for your current mortgage, you might think qualifying for a mortgage for a second home will be a breeze. But this isn’t always the case.
Lenders may require you to put down a 20% downpayment on a second home, which is something that they don’t always require when people are purchasing a primary home. You might also have to make sure you don’t have too much debt since that could be a red flag for lenders.
It’s smart to sit down with someone from a mortgage company before you fall in love with a second house. They can let you know how likely you are to be approved for another mortgage.
Look for a Second Home in the Right Area
When you have a second home, there’s always a chance that you might have to sell it at a moment’s notice. If you run into financial trouble at any point, your second home might be the first thing to go.
Therefore, you should try to find a home located in a desirable area. An up-and-coming area would be ideal since you can sit back and watch your home gain value over the years and rake in a profit on it if you ever have to sell it.
Do your homework and find the right area to buy a second home in. It’ll take some effort on your part, but it’ll be well worth it in the end.
See How Much It’ll Cost to Get to Your Second Home
If your second house is only an hour or two away, you don’t have to worry about spending a bunch of money to get to it. But if it’s located in a place that’s going to call for you to fly when you go to it, try to gauge how much flights will cost you.
You don’t want to end up in a position where you’re spending thousands or even tens of thousands of dollars on airfare every year to get to your second home. That could make the home a bad investment on your part.
Think About Using Your Second Home to Generate Income
One of the best parts about owning a second house is that you can use it to generate extra income every month. It might even pay for itself if you turn it into a rental property that is always rented out.
If your plan is to rent it, research rental rates in the areas where you’re looking at homes. You want your second house to bring in as much money as it can.
Start Looking for a Second House Today
As long as you pick the right home, buying a second house can be very beneficial to you and your family.
It can give you all a place to go on vacation. It can also go up in value over time and earn you a nice return on your initial investment. And it can even be used as a rental property if you want, which will give you an additional income stream.
Would you like to see how to use a rental property to generate income? Browse our blog to find out exactly how it’s done.