What to consider when buying a second home
Many people dream of owning a place on the coast or a spread out in the country. If you’re fortunate enough to be in the market for a second home, avoid some common mistakes that could turn your dream vacation retreat or investment property into a nightmare.
Why are you buying?
The answer to this question drives every decision you’ll make. Is this home going to be for family vacations? For investment income as a rental property? Will you eventually make it your primary residence?
If you want family to congregate at your vacation getaway, make sure it’s convenient for everyone, including you. You don’t want a seven-hour drive to a property you expect to use on the weekends. An investment property won’t generate income if the area isn’t popular with renters. And check for healthcare facilities before you pin your retirement plans to a location.
You probably have a favorite destination in mind, a place where you’ve spent wonderful vacations. Before you dive into the real estate market, however, make sure you really know the area. Have you visited during peak season and off season? How well do you follow local news and politics? Spending a week or two in a location is very different from owning property there and being invested in a place’s future.
A Texas Realtor is a great source for such local knowledge. In addition to their real estate market expertise, they involve themselves in all aspects of their communities. Find an experienced Realtor who knows the area and can advise you on pros and cons you may not be aware of as an outsider.
You don’t want to rent it, but …
Right, right, you don’t want strangers living in your second home, and you can afford to take that position – today. Circumstances have been known to change, however. Even if you’d rather not rent your property, consider buying in an area where you could rent it. Make sure the homeowners association or condominium board doesn’t have any bans on short-term rentals and that you’re in a place where others would want to visit.
Increase your budget
You likely have an idea of how much home you can afford, but does your budget cover all the costs? By that I mean the cost of a caretaker to look after the place when you’re not around. Or, if you’re renting it out and don’t want to handle it yourself, fees you will pay to a property management firm. Spend some time researching these costs to get a truer picture of your costs. Speaking of money …
Financing will be different
Securing a mortgage loan for a second home is different than for a primary residence. Rates can be higher and a lender’s standards for what qualifies as an “investment property” vary. There may also be tax implications to buying, owning and selling a second home. Sit down with your financial advisor or tax professional to go over the fiscal implications of any purchase.
The beauty of buying a second home is that you already have a place to live. You’re not juggling moving and selling dates with this purchase, so don’t rush. Too many buyers fall in love with a spot and jump at the first property that comes along. Count on your Texas Realtor to help you fully understand the local market, so you make the right decision for your situation. Whether you need advice on which community to look at or how the economy affects tourism in the area, your Texas Realtor is your local expert. For more information, I invite you to visit TexasRealEstate.com.
By AMY DUBOSE
Association Executive – San Marcos Area Board of Realtors®