POST SPONSORED BY JULIA GAFFNEY
Are You Ready to Buy a Second Home?
Important Questions to Ask Yourself If You Think You’d Like a Second Home
Many people find themselves in a comfortable place in life and begin thinking that owning a second home is a good idea. Whether it’s a vacation home or an investment opportunity, owning a second property isn’t always such a good idea. If you’re thinking of buying a second property, ask yourself the following questions to determine whether you’re ready to buy another home or not.
An Ideal Situation
There is no rule that says you have to be a certain age to buy multiple properties, but if you’re a parent, the ideal age is in your 50’s. By then, your kids are grown and likely out of the house. You have more time to devote to another home and probably some disposable income, too.
Important Questions to Ask Yourself
Before you contact your real estate agent, ask yourself these important questions.
Am I ready to commit?
If you’re buying a vacation home, will you like vacationing in the same place 5 or 10 years from now? If you’re buying an investment property, are you up for the responsibility of being a landlord?
What are my financial obligations?
Just because you have the extra money doesn’t mean you should spend it. Think about how buying a second property will impact you financially. What does it mean at tax time? How much money will you need to maintain it? What about monthly bills like utilities? If it’s a rental property, will it generate enough money to make it worthwhile? If it’s a vacation home, will you be able to use it enough to justify buying it?
Do I have enough money upfront?
Buying a second home is expensive. You’ll need at least 25 percent upfront to cover the down payment and closing costs. Can your bank account handle that kind of deduction? What about emergency expenses? Will there be enough left to cover any emergencies that may arise?
What is my exit strategy?
If you decide that owning a second home isn’t for you, what is your exit plan? Can you rent it out or sell it quickly to recoup your money? It’s always a good idea to have an “out” should something happen, or you simply decide that owning a second home isn’t for you.
Buying a second home is a big undertaking that’s not right for everyone. If you’re in a position to buy and are thinking you might want a second home for vacation purposes or investment purposes, be sure you ask yourself the questions listed above first. Really exploring the answers will help you figure out if you’re ready to buy a second home or not.