Owning a home is great—it provides you with not only a place to live, but also with a formidable investment that you can capitalize on at any moment. Owning a second home comes with the same perks, but offers you many more opportunities, and contrary to popular belief, it is not something that only the wildly-rich do.
Whether it’s for a second place to stay or a second flow of cash, owning two homes can be extremely beneficial. For those snowbirds who head north in the winter, or for those who love being on the beach, owning a second home can be a convenient and reliable way to stay where you want to. On the other hand, if you only plan to use the property for a few months out of the year, or if you do not plan to live there at all, you can rent out your second home and gather up a sizeable monthly rent payment. If all else fails, you can turn around and sell your other home for a profit, without jeopardizing your current living situation.
However, before going ahead and buying that second home, there are a few things to consider, and some things to be aware of. First and foremost, you need to have the money to purchase another home. This may sound like a no-brainer, but you are going to need at least six months of potential mortgage payments stowed away before the lender will authorize distribution of the loan. You don’t need to be in the top 1 percent to do this, but it is a factor to consider. Branching off of that, you are going to need to make sure that you do not have a lot of debt. In fact, your debt-to-income ratio needs to fall around 36 to 42 percent to comfortably secure another mortgage. Finally, you are going to need to plan for potential expenses. Whether they be for repairing the home, installing appliances to make it livable, or for general upkeep, you will have to foot the bill—especially if you have renters.
Purchasing a second home can be a daunting task, but it can come with several benefits. It’s a secure investment with a lot of growth potential—it doesn’t matter if you’re investing in fun, renters, or the real estate market. A second home can easily pay for itself in a few years. Just be wary of the ramifications of another big purchase, and make sure you are prepared to hit those head on. You don’t need to be upper-class, but you do need to be financially-savvy.
If you feel you are ready to branch out and buy a second home, call our office or come on in and have a chat with us.
be able to tell you what is the best for your situation, and get the ball rolling!