When life is going well, people start to think of new and exciting things to do – like buy a second home. There may be several reasons for investing in a second home. Interested in investing in a second home? There are some things you should consider.
The reason you’re thinking of buying additional property certainly affects your next steps. Do you want a retreat, a place to flip, or a rental property? Are you thinking of this is a true investment, something to add another income stream to your portfolio? What do you want the end game to be? Make sure you’re clear on your goals before proceeding.
Of course, you’ll want to analyze your current financial situation. Buying a second home involves more expense than just making that second monthly mortgage payment. Other costs may include:
- Down payment on the mortgage;
- Additional insurance costs;
- Closing costs;
- Maintenance and upkeep on the second home;
- Fees; and
- The cost of hiring someone to manage rental property or maintain vacation property.
If buying rental property, remember there may be months when the property is empty. Keep additional cash handy to pay the mortgage when the rental income is lacking. Make sure you can comfortably take on the additional expenses before making firm plans.
How is the real estate market right now in the area where you’d like to purchase? Are housing prices on the rise or the decline? What are the chances you might lose money on a house that’s bought for investment purposes? Talk to your attorney and financial adviser before making any offers.
Research current mortgage rates, but also see what real estate experts are predicting for future rates. Is this the best time to buy or should you wait a few years?
Talk to your financial adviser and attorney about taxes. Will your investment increase your taxes or give you an additional mortgage deduction? Keep in mind that proposed tax reform may eliminate the deduction for a second homes.
Have Questions About Buying a Second Home?
The attorneys at the Dillon Group, PLC, have the tools to analyze your situation and discuss options that fit your needs. Give us a call at 757-962-4796 to set up an appointment or contact us online by using our convenient Contact Form. We assist clients in Virginia Beach, Newport News, and surrounding communities.