If there is anything more exiting than buying your first home, it is buying your second home. Be it a vacation home or an investment in a fast developing neighborhood town – buying a second home can be crucial step. In the age of home loans and rising disposable incomes, buying your second home is not really as much of an improbability as you once thought it would be. More and more young professionals are planning to put their money in a second spacious home from the buzz of everyday city life.
So here’s a list of things you should know before you invest in your second home:
Price does matter: While price is a key consideration, nobody can really predict when prices will hit rock bottom. Make sure you research the locations you’re interested in, walk around the area and check out the resale values. Probably the best time to negotiate is when an area or project is just developing but not fully developed.
Location: Find out how far the place is located from your primary residence. Will it be possible for you to keep visiting your second home quite often? Is the area well developed? Are there any hangout destinations in the area, etc? If you manage to invest in a home in this kind of location, you will also be able to find a tenant if you plan to rent your home in future. The biggest advantage is that viewer and the location actually increase the home value by 20 per cent.
Hire an estate agent: Hire a real estate e agent who knows the area well. A local realtor can identify the hot neighborhoods. S/he can also clue you into local property values. Ask for a list of the agent’s recent closing so that you can see what sort of financial estimate the agent plays in. If s/he doesn’t have expertise in transacting sales of homes in your price range, find someone who does
Research potential hazards: Learn the history of the place and find out if the area is open to natural disaster. Also find out whether you can purchase insurance to cover common local hazards.
Infrastructure: make sure you talk to people behind the project. And make sure it is non-agricultural land to avoid unnecessary problems in future. Check the conditions of the roads that connect to your house and find out if there is proper water and electricity supply in the locality.
Think about Taxes: How you use your second home will determine its impact on your taxes. For instance, if you rent your second home, or stay in it at least two weeks a year you can deduct your mortgage interest and property taxes. A home that’s rented out and never used for personal pleasure will be subject to different deduction standards so check with an accountant before committing.
Rental possibilities: If you hope to make some money by renting the home for part of the year, find out seasonal demand for rentals in the area.
Maintenance: The reason many people end up selling their second home is because of maintenance hassles. Before investing, consider the time and cost it takes to care for an additional home. Often seasonal homes will have to be opened and closed depending on the weather. In addition, there is the home cleaning and other regular chores that need to be taken care of. Though they can be hired out, they prove to be costly. So, if you decide to purchase a second home, be sure to take up the maintenance responsibility
Factors that may affect the value of your home:
If you are buying a second home with resale as your ultimate objective, you should keep these factors in mind:
1. A property located in driving proximity of a major metropolitan area will have greater sale potential.
2. A property convenient to shopping avenues, restaurants and local attractions will sell like hot cakes.
3. An area that offers recreational activities during more than one season will appeal to a wider sector of potential buyers
4. An attractive well maintained property is always going to sell much faster. So, it’s important you keep it looking good
5. A property with a good rental history will be more desirable to a buyer with investment potential in mind.