Whether you’re looking to invest, create a quick getaway, or find a place to retire in the future, a second home can be a possibility – as long as you take the right approach.
The typical buyer considering a second property is 46 years of age and makes about $99,000 per year. The property purchased ends up being about $211,000 and is used for entertainment or vacationing. The buyer, in this scenario, eyes a detached single-family home, a condominium, or a townhome.
Yet, as you consider this decision, be sure to keep these points in mind:
Ask yourself, “Does a second home make financial sense?” If you see yourself going over budget monthly, it’s out of the cards.
But, keep in mind that a second home can cost more than the first. One, you often end up having to pay a management company to watch and tend to the property, and second, you’re frequently required to purchase hazard insurance, to prepare for potential natural disasters or major theft. These, too, are in addition to typical monthly costs, insurance, income tax, and property taxes. If you plan to rent it out, be prepared for any maintenance costs, too.
Getting a Loan
While it’s not unheard of to have two mortgages, financing a second home may require creativity. A loan isn’t entirely off the table, but for a larger down payment, you may want to consider a gift from family and friends or, if you’re buying a multi-family house, partnering with another purchaser. For the latter, understand that co-ownership should be established with a written agreement that touches on splitting costs.
If you plan to invest, be aware that lenders often have stricter guidelines.
In all instances, it’s advised that you seek out a local lender, one that’s more familiar with the market at hand.
The Right Location
Just as with your first home, a second could put you at a loss – especially if the location isn’t great.
Beyond just considering the type and price, seek out regions with steady appreciation rates, as well as desirable qualities future buyers may want.
With this in mind, experts recommend resisting impulse buys – that is, going on a vacation and purchasing a summer house while you’re away. Because you’re unfamiliar with the local conditions, you could end up with a home you can’t afford and can’t sell in the future.
Want to find out the most about a vacation location? Talk to the locals – learn about the community’s ins and outs and everyday life before you make a commitment to live there for part of the year.
No matter if you’re searching for a first or second home, By Carrier presents an array of award-winning communities in Connecticut. If you’re house-hunting, contact us to learn more.