Some important considerations include the following:
1) Your financial picture. Even if you have plenty of money in the bank to cover a down payment and a second mortgage loan, you’ll need to plan for ongoing costs. If you aren’t going to live in the home full time, you’ll need to hire a property management company to take care of the house when you are not there. You’ll also need to factor in insurance costs, property taxes, and maintenance.
2) Location. If you are buying a second home in a different community (or perhaps even state) than where you are living now, you’ll want to research the market in which you’re buying. What will your resale or rental prospects look like? Research the property just like you would research your primary residence. Take into account the desirability of the area in terms of amenities, the school district, property tax rates, and recent resale trends.
3) Type of home. Decisions, decisions. Single-family home, multi-unit property, condominium, or townhouse? What type of home fits your needs and what do you plan to do with it? Condos typically involve associations that may involve a fee – but that fee could manage upkeep and maintenance for which you would otherwise need a management company.
4) Amount of time spent in the home. Here, you have several options, from dividing your time between homes to renting out your second property either periodically or part- or full-time. Which brings us to the consideration of whether …
5) To rent or not to rent. Rental income can be financially lucrative and help you pay for the mortgage on your second property, but taking on landlord duties can present its own set of issues. First, rental properties can take a long time to actually start to make money. Finding good tenants (or vacationers)
As with any home purchase, when buying a second home, it’s vital to educate yourself ahead of time about the potential benefits and pitfalls. If you have questions or concerns, talk to your real estate agent for valuable advice concerning owning a second home.