Second homes are fairly common with more than 10 million Americans owning one. Many people purchase a second home as a place to stay while on vacation, as a future retirement home, or as an investment property. Purchasing a second home can be a great decision for many, but it's also one that must be considered carefully. Choosing the wrong property can leave a homeowner cash strapped or can be a bigger time commitment than expected. Here are three tips for purchasing a second home.
Use a Local Real Estate Agent
Finding the right property can be difficult. This is especially true for anyone looking at homes for sale that are far away from their current residence. Instead of navigating the listings alone, hiring a local real estate agent may make the process of purchasing a second home easier.
Local real estate agents can work with a potential homeowner in order to find the property that best suits their needs and budget. Local real estate agents will also know the market well enough to steer their clients in the right direction. A real estate agent can be indispensable when looking at homes for sale in a different locale.
Consider Additional Home Expenses
Another thing to consider when purchasing a second home is the additional expenses that come with owning a second property. Owning a second property involves more than just paying another mortgage. Things like landscaping and maintenance can add up over the course of a year.
A good rule of thumb is to save between 1 and 3 percent of a home's purchase price for maintenance and repairs every year. A larger down payment is also common with second homes. Anywhere from 20 percent to up to 32 percent is not unusual for the down payment on a second home.
Consider Location Carefully
When purchasing a second home, location is crucial. Potential homeowners should ideally consider a second home in an area where property values are appreciating. It's also important to look at other homes for sale in the same area in order to get an idea of what shape the current real estate market is in. Location will also play a big role in second homes that will be rented out. Potential homeowners should also check local and city laws as well as homeowners association rules before purchasing. In some cases only monthly rentals are allowed while weekly rentals are prohibited.
Purchasing a second home is a big commitment. Before making the jump, potential homeowners should consider a few things. A local real estate agent can help find the right property for the buyer. Additional expenses such as maintenance and repairs should also be factored in when choosing a second home. Location is also just as important, if not more so, when choosing a second home as it is when choosing a first home.