If you already own a home and have paid off the mortgage, or are in a strong enough financial position where you can afford to take on a second mortgage, then you may want to consider looking into buying a second house or condo to vacation in, retire in or rent out. However, before you begin to search for a second home, consider the following:
- The reason for buying a second home – If you’re buying a second home to use as a weekend getaway spot, then you’ll want to make sure that the house isn’t far away from your primary residence. It’s not going to be much of a vacation home if it’s too far away to spend a weekend at. However, if you’re buying a second home that you plan on retiring in, then the distance may not matter but you’ll want to make sure it’s in a location that you’ll be comfortable living in.
- The costs of owning a second home – Even if you’re not renting out your second home, you will still have to put money into maintaining it, especially when it comes to the landscaping. You will also have to pay utilities. Additionally, expect the homeowner’s insurance on your second home to be more expensive than that on your primary home. Insurance companies tend to charge more for secondary homes. Since they aren’t occupied all year long, there’s more of a risk associated with insuring secondary homes.
- Renting out the house or condo – If you plan on renting it out, whether it’s just for a couple weeks out of the year or all year-long, then you’ll need to understand that you’ll be responsible for all of the duties of a landlord. This means that you will have to spend time and energy managing the property, which includes ensuring that everything is fixed and maintained, making sure the rent is paid on time, and making sure that your tenants can reach you easily. Being a landlord takes a lot of effort and you will have to pay taxes on your rental income, although you will also be able to write off your rental expenses.
- Using a real estate agent – Most people do not purchase a second house in the neighbourhood of their first house, especially if it’s a vacation home. You’ll want to use a real estate agent to help you find the type of vacation home or condo that you are looking for, to ensure that’s properly valued and that’s located in a neighbourhood that meets your specific needs.
Buying a second house or condo to rent out, retire in or use as a vacation home can be an excellent investment, just be sure to consider these things first.
