With historically low interest rates, demand for vacation, investment and second homes remain strong. If you’re interested in purchasing an investment property here are 10 tips from HGTV for a smart investment decision.
1. Don’t impulse buy. Thoroughly researched your purchase first. Make sure you can afford a second home and that it fits your needs.
2. Evaluate your needs and goals. Be realistic about what type of second home suits your lifestyle. If you’re looking for a weekend getaway, staying within a day’s drive of your primary home could be a good move. If someday serves as a retirement spot, check out health care services in the area.
3. Get to know the area. Get to know the area from a non-tourist perspective if you plan to buy there.
4. Hire a Realtor or real estate Broker. Buying a vacation home outside your area can be tricky, as residential real estate is extremely localized. An agent can help you get to know the market.
5. Decide what type of home is right for you. Think about how much time you’re willing to devote to maintenance when deciding between a condo and a single-family home. Condos & townhomes are a good choice for buyers who don’t want to deal with year-round maintenance.
6. Shop around for a mortgage. The market changes constantly, speak to a lender and see what is available.
7. Calculate additional expenses. Home insurance and maintenance costs can add up. Get several insurance quotes before making an offer. For maintenance, a good rule of thumb is to set aside 2 percent of the home’s value per year for upkeep and repairs.
8. Consider fractional ownership to cut down on costs. If you buy a second home on your own, you may find yourself shelling out a lot of money for the amount of time you actually spend there. By pooling your resources with friends or relatives, many people can enjoy a vacation getaway for a fraction of the cost.
9. Possible tax benefits. You don’t have to pay taxes on rental income if you rent out your home for fewer than 15 days a year, but you can’t deduct any rental expenses. If you rent out your home for more than 15 days a year, you have to report the income, but you can deduct expenses like maintenance and cleaning.
10. Rent it out for extra income. If you need extra cash to supplement your monthly mortgage payment, renting out your second home could be a good option.
Contact us today to discuss your investment property goals, plans and ideas.
Source: HGTV
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