Think About These Things Before Investing in Another Property
Purchasing a second home for a summer getaway or winter retreat is a dream of many--and for good reason. However, there are some things to consider before investing in another piece of real estate. Let’s dive into everything you should think about prior to buying your second home.
1. Contemplate the Cost
The first thing to consider when determining whether or not you should purchase a second home is the cost. In addition to the price tag of the home listing, you’ll have additional costs associated with the home purchase. For example, seasonal maintenance, general upkeep, monthly utilities, and home insurance will all be required expenses. Many homeowners that finance multiple properties also invest in high-quality security systems to keep an eye on their homes while they’re out of town.
Finally, you’ll want to understand how purchasing a second home could impact your taxes. Depending on your financial circumstance and how you plan to use the property—as a rental, a true second home, etc.—an additional property could lead to tax increases or breaks.
2. Avoid Impulse Purchases
Although you might find yourself on a family vacation and in love with a waterfront property, it’s important to take time to determine whether or not a second home is the right decision for you. Even if you find a home that’s just right, you’ll want to give yourself time to learn more about the details. Some important aspects to consider include property value, lot location and size, neighborhood safety, floorplan, and so much more.
Keep in mind, a home is a big investment that you can’t simply liquidate or return with a day’s notice. Therefore, you’ll want to think through your decision before putting money on the table.
3. Determine the Purpose of the Second Home
Next, you should consider what the function of your second home would be. Are you hoping to buy a property solely for investment purposes, to serve as a retirement home, to vacation at, or to rent out to others? Once you decide what the purpose of your second home would be, you can determine if it’s possible to purchase it.
During this step, be sure to think about your current needs versus your long term goals. When assessing your assets and expectations of now and the future, you’ll be in a better position to decide whether or not a second home is right for you.
4. What Type of Property is Right for You?
Maybe you already have everything in line—your finances are good to go, you’ve thought long and hard about your decision, and you understand the purpose of your second home. Now is the time to decide what type of property you should buy.
Condominiums, townhomes, apartments, and single-family homes all come with their own sets of perks and drawbacks. For example, single-family homes offer ultimate privacy and independence. However, other home options may have associations that handle maintenance, which could be a great option if you don’t plan to be in the home all year.
Whether you’re still contemplating if a second home is right for you or you’re ready to search for your next property, . Our team is full of insights regarding Hamptons luxury real estate and the home buying process to help you get the ball rolling.