Buying a second house is extremely exciting, whether your plan is to fix it up and sell it afterward, use it as a vacation retreat, or just a place to retire to. Buying another house requires a lot of thought.
There are many people who have bought a second house and regretted it later on, if not immediately after. Their main complaint, you’ll find, is usually centered around the fact that it is extremely expensive to maintain, and that the annual taxes were outrageous as they kept climbing each year.
Many of them will tell you that they wished they had hired a property manager when it came to renting it out. One of the most difficult things to do is rent the house out while you aren’t there. You’ve got to be realistic about the times you likely won’t have it rented.
Do not choose a home in a poor location. If you do, you’re going to have a hard time selling it, as well as renting it. When thinking about if you should purchase the house; did you like the area? Was is the area close to the things you used to do? Would you be irritated about the transit time? You must research the market, which you cannot do on your own. You need a real estate agent to talk to you and explain the market trends to you.
The type of home you buy is just as important. Sometimes condominiums or town homes are preferred over single family homes. You’ll have to decide this based on what type of home fits your lifestyle, how much you’re able and willing to spend, and the maintenance depending on the size and age of the home.
You’ll have to worry about property and income taxes if you plan to rent the house out. The amount of income tax you’ll pay will depend on things such as how often you plan to be there. You are going to need to put a large amount of cash to put down on the house in order to get a mortgage that you can actually afford. Just because you can get approved for 1 million, doesn’t mean you can afford $5,000 a month in mortgage payments.
Being a landlord is not easy. A unit can flood, a tenant can destroy and vandalize the property, they can decide to break their lease and move out on a whim without even letting you know. Also, if its a vacation home you’re renting, the same thing can happen. A deposit can be put down on a 2 week rental, and then they back out. You’re going to have to have home insurance as well to protect the house from natural disasters, depending on the location of the house. Liability insurance is also a favorable addition to the monthly expenses.