Things To Know Before Buying A Second Home

Owning a second home is a dream for many and a reality for a relative few. It's easy to imagine yourself enjoying vacations

whenever you want, retiring to a place you love or even generating income as a landlord. There are plenty of reasons why buying a

second home is a good idea. But there are also some considerations that should make you think carefully before you

make your move.

Decide Whether Buying Is Right For You

1) Do some market researchGet in touch with a property agent and take leads on the latest price trends of the households. 2) Understand intent of buyingBe clear on whether you want to buy a second home for living or for earning rents. The most expensive houses may not get you good rental yields. 

3) Make a list of possible expensesProperty taxesUpgrading/up-keeping expensesInsurance premiumProperty management services

4) Understand tax implicationsConsult a tax advisor to get accurate, up-to-date information about tax write-offs, loans, interest rates, etc.

Taking The First Right Steps1) Find a second home in the area where you may wish to reside. 2) Get insights about the place that can increase the value of your potential home:- Proximity to good schools- Reliable and extensive transportation options- Shopping options- Proximity to hospitals, police station and fire station

3) Get familiar with the responsibilities of landlord.- Know how to evict a tenant or terminate a lease.- Learn your state's laws about security deposits.- Know how to structure the rental application and tenant screening processes.- Know your duties when it comes to regular repair and maintenance.- Protect yourself from liability when it comes to tenant injury. - Know the list of tenant's rights, especially concerning privacy.

4) Hire a property agent to help you narrow down your housing search until you've weeded out all but the best fits.

Finalizing The Deal1) Secure home loanMake sure the Total EMI (Including the 1st Loan) is not over 36% of the monthly incomeOne should be prepared to pay 20% of the housing cost as down-payment,  2) Make an offerMake an offer on a second house that you like. Expect to make several offers that are ultimately outbid before you land one.

3) Safeguard your newest asset - Get a home inspection prior to purchasing to be aware of any problem that has not been disclosed before. - Get title insurance. - Get hazard insurance (earthquake, flood, fire, etc.)

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