3 Important Considerations for Purchasing a Second Home
The purchasing of a secondhome is often a multi-faceted decision. Sometimes you’re spending so much time in one place that you need a permanent residence there, perhaps you and your family have a vacation destination you all love and would like to own a piece of given the opportunity for rental-income, or maybe you just feel like realestate is the right investment for you. No matter what your reasons are for purchasing a second home or rental property, there are many pros and cons worth considering before making any final decisions.
1. Extra Maintenance
A second home means a second home’s worth of extra maintenance and upkeep, which will be especially burdensome if it is being left unattended or filled with short-term tenants for extended periods of time. If the property can be rented out, will the income cover the costs of upkeep on the property? If it won’t, or if bookings suddenly decrease, will the cost of upkeep be too burdensome?
2. Location, Location, Location
When purchasing a second home for vacation purposes, it is easy to get swept up in the natural beauty surrounding a property. Be sure to keep in mind what your healthcare and other general needs are now and what they will be in the future before deciding on a property to call home. Take some time to make sure the property is near anything essential to you such as hospitals, doctors, pharmacies, physical therapists, or any other professionals/establishments you frequently visit and cannot do without.
3. Potential Risks
Just like your first home, appreciation of value as well as the possibility for depreciation needs to be considered when making a purchase, as well as how much of your liquidity will be tied up once things are finalized. Take into consideration how easily and quickly you would be able to liquidate this new asset should your financial situation or home life change, leaving the continued ownership of your second home no longer viable or convenient. Also take into consideration how likely it would be to find a long-term renter should that be a path you must take in the future.
A beautiful home in a highly desired area can be a phenomenal investment, but any home purchase always comes with risks. Before you settle into a new place, take some time to speak with a financial professional that can help you weigh the pros and cons and give timely, relevant advice to make this new adventure run a bit more smoothly.
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This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
Source: The Pros and Cons of Owning a Second Home
