Owning a second home may seem like it is only an option for those with a high net worth, but many more buyers are considering the purchase of a second home. Right now some homeowners are purchasing a new home before selling the old one to ensure they will not have to rent. Other buyers are considering the purchase of a second home to use as passive income in the form of a “flip house” or a rental.
For some buyers, purchasing a second home may be a good idea, and for some, it may not be so great of an idea. If you have been considering purchasing a second home and taking on a second mortgage here are some things to consider.
Can You Realistically Afford Two Mortgages Right Now?
This is a good question to ask yourself first before going shopping for another home. If you are purchasing a second home that you do not plan to use as a primary residence the mortgage terms can be very different including the qualifying terms. Taxes play a significant impact in a second home not used as a primary residence as well.
Pros and Cons of Investing in a Second Home
The are many obvious benefits of purchasing a second home, if you have considered a second home you probably already know a few of them. These benefits include the chance to go on vacation whenever you want if you are making personal use of the home, the ability to make some extra income with renting or fixing and selling at a profit, the increase in net worth, etc.
You may also already know some of the cons as well, but there are some cons to owning a second property that are little discussed. One of these items is property taxes. If you plan to purchase a second home in a highly popular and desirable destination the property taxes could be more than you realize. Homeowners Insurance is more expensive when covering a second property. It will limit other vacation options as you are probably putting your vacation budget toward the cost of the second home.
Deciding to Rent Out a Second Home
These can be a good idea for some owners and a bad idea for others. Renting the home can bring in some money to help cover the cost of the mortgage or maybe even bring in some passive income. It is not, however, a chance to get rich quickly. There will be many expenses and responsibilities you have as a landlord. There is also the possibility of going a long period of time without a renter and the home sitting empty. There are many risks that anyone planning to rent a second home should be aware of before purchasing a home to rent.
The best way for anyone to determine if purchasing a second home is a good choice for them personally is to consult the advice of many different professionals including mortgage, personal financial planners/experts, real estate experts, and even friends who may have purchased a second home.
For more information on homes for sale in Wewahitchka Florida and other areas of the Forgotten Coast please contact us at any time.