Buying a second house is twice as special. Firstly, because you will be investing for a second time, proving that the first home was the right decision. Secondly, you will be a proud property owner of two houses, with long-term financial security and steady income.
Although you will be going through the process of buying for the second time, you may still need tips to make the best decision. Some of these tips include:
You may assume that deciding the sale price is an important step. Although the cost carried weight, it’s not what will always drive your decision to buy a second house.
For instance, if your heart is set on a vacation house on a beach, you may be hard-pressed hard to go for a single-family home for half a million dollars.
Location is one of the driving factors in real estate. How you plan to use the second house may have a bearing on the property’s location.
If you accumulated equity in the primary residence, a cash-out refinance, or home equity loan will be an attractive option for purchasing a second house. For one thing, it’s easier to qualify than mortgages on vacation properties.
If you think of using the property to generate income, financing a second house through home equity means you will not have to worry about documenting rent income to justify your loan.
If your home doesn’t have fancy updates, which draw many offers in the market, consider renting for several months until you sell. The income may cover the mortgage, and you will deduct interest on your taxes.
Double house ownership is not meant for everyone. However, with the best plan, moving company, savings, you will be able to relocate to your dream house sooner than you expected.
Hire a Realtor
Some individuals falsely believe they may save cash on investment properties by not working with a realtor. This is not farther from the truth. As a matter of fact, buyers don’t pay agent’s fee – the seller does.
The 4% commission is constructed on the cost of the house. Just because you are not dealing with a real estate agent doesn’t mean you will save 4%.
Plus, real estate agreements are complex, and you might end up paying for the things that sellers don’t pay for. Always work with a realtor when buying a house.
Look at the Tax Implication
Second-house owners should worry about properties taxes or income tax if they decide to rent it out. Although taxes are unavoidably a burden, planning during house-hunting may save you a lot of money every year.
For instance, buying a house over a town’s border may trim your annual property tax bills. If you consider renting the second property, the days you spend there will make a great difference in how much you owe in income tax.
When weighing your options and have a good game plan, purchasing a second house will be a great experience and a dream come true.
However, don’t let the dream become a nightmare. The home may quickly turn into a burden if you choose to rush things.