Trisha Bowen - RE/MAX Real Estate Center

Posted by Trisha Bowen on 1/1/2018

Owning a second home or vacation home is the dream of many Americans hoping to retire in style. However, owning a second home can also be a huge financial asset and even an added form of income if youíre savvy with the rental process.

What stops most of us from buying a vacation home in our ideal getaway? The funding, of course. But, there are ways to plan ahead to ensure youíll be ready to take the plunge and purchase a second home when the time comes.

In todayís blog post, weíre going to be talking about the steps to buying a home away from home and give you some tip on how to accomplish this goal in the most financially-sensible way possible.

1.  Location is Key

When you buy a second home, you take on all the responsibilities of homeownership a second time. Since you wonít be around every day to tend to maintenance tasks and troubleshoot problems, you risk discovering costly repairs that could otherwise be avoided.

The most common issues to be concerned with are frozen pipes in northern climates, flooding in coastal areas, and problems like pests that can be found just about anywhere.

Depending on your budget, you might want a home you can drive out to on the weekends, meaning somewhere close by to your primary home. This option also makes it easier to stay up-to-date on home maintenance tasks before they become an issue.

2. Try before you buy

If your ideal vacation home is in an area youíre not totally familiar with, itís a good idea to visit the neighborhood, talk to the locals, and gain their perspective on the area before buying.

This trip will also give you a sense of what you can expect to spend each time you visit the home. And, if you plan on renting out the property when you arenít using it, youíll be able to gauge what a reasonable rent price is for the location.

3. Earning income from your vacation home

Making extra cash from a home that you get to use pretty much whenever you want. Sounds like a dream, right? It can be if done properly, but youíll need to ensure a few things before you can start earning income from your vacation property.

First, be aware that investment properties often require a larger down payment (typically 30%). Lenders also charge extra interest on homes that will be rented out.

Finally, there are local and state-level laws youíll need to adhere to. These laws are designed to protect your interests as well as the people who rent out your property, so make sure you use a standard rental agreement for your area.

4. Making an offer

Youíve been here before. Once youíve decided on a home, itís time to start crafting your offer and negotiating with the sellerís agent.

However, before you pick a number, do some research on all of the expenses youíll be paying on the house in question. Property taxes, homeowners association dues, utilities, and any other costs should be on your radar before determining if itís the right home for your budget.

Youíll also want to be aware of the stipulations of renting out a property you own. This includes reporting income from renting your home to the IRS.

Now that you know the steps youíll need to take to move toward your goal of buying a vacation home, youíll be better equipped to make decisions that are best for you and your familyís future.

Posted by Trisha Bowen on 7/24/2017

Few people may have thought that it would ever pay off. But, there are people who bought a house at the height of the Great Recession who are earning a significant profit on that house. Buying a house when prices are low then selling that same house after  prices rise is almost a sure way to generate a profit.

Open your eyes to how a second home saves you money

Yet, you don't have to sell a house at a profit to generate income from a second home. Keeping a second home pays off in more ways. An example is when  you buy a second house while your child is instill in high school.

During this time, you could rent the house to people who recently relocated to the area.These are the very people who may most appreciate the chance to move into a well cared for home on a good lease.

After your child graduates from high school and enrolls in college, she could live in the second house that you bought. Outcome of this is saving the money that you would have spent on out-of-state campus housing.

Buy a second house in an upscale community that's within walking distance of major colleges or universities and you could save yourself or your child the money that you would have spent on a new car or truck for your child. You could also put your child within walking distance of major companies, places where your child could gain firsthand experience in his major by participating in rewarding internships.

Even more savings attached to owning a second home

But, you don't need to have college aged children to benefit from owning a second house. Owning a second house could save you money if you use the second house as your:

  • Vacation home - Although the cost of an overnight hotel stay varies by facility, you could easily spend $150 a night on a hotel if you're vacationing with two to three people. Over the course of ten days, that comes to $1,500.
  • Rental property - Rent out your second house and you could generate enough money to cover the entire cost of your main home.
  • Retirement home - Instead of paying for costly nursing home stays, you could encourage your parents to relocate to your second home. If your parents are facing health challenges, you could pay someone to care for your parents inside the second home. Even with the cost of the daily care, you might spend less than what it would cost to keep your parents in a nursing home.

You could also operate a full scale business out of a second house. One good business that you could operate out of a second house is a bed and breakfast. The more creative you are, the more ideas may surface that reveal to you surprising ways that a second home can save you money.

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