Real Estate Tips

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1. Ali Abdullah
   

   Hi There, If you are thinking of buying a new home aside from the one you already have, below are seven important steps to consider before purchasing our second home. Your second home may be for other purposes than residential, but the steps are equally the same in purchasing units. Read on this article and learn about the essentials I am talking about. 1. Decide Whether a Second Home Makes Financial Sense It is no doubt that you want your second-house purchase to be a sound financial move. You’ll want to tally up your likely expenses, factoring in any extra costs based on the fact that you won’t be there every day, such as hiring a management company and the high cost of hazard insurance. Then you’ll need to build up your cash reserve, and, if you plan on renting out the property, determine how much you can expect from rental income. 2. Decide Where, and What Type of Home You’ll Buy A home in a badly chosen location won’t serve anyone’s goals. Look into factors like the strength of the local economy, trends in house resale values, convenience and amenities, property tax rates, the quality of local schools and medical care, and more. The type of home you buy is similarly important. The costs and demands of owning a single-family home are different from those of owning a condominium, townhouse, or co-op. Which type serves you best will depend on factors such as cost, location, and upkeep. 3. Look into the Tax Implications Second homeowners need to worry about both property taxes and, if you’re renting out the place, income tax. Though taxes are inevitably a burden, a little advance planning can save you thousands of dollars a year. 4. Come up with Short-Term Cash and Long-Term Financing Most people pay for their home with a combination of a down payment and a loan for the remaining amount. The higher your down payment, the lower the loan, and the more house you can therefore afford. In order to come up with down payment cash, you may need to get creative. Most buyers will also need to get a home loan to help with the rest of the financing. 5. Consider Non-traditional Financing Methods One unique way to help finance your second home is to tap the “Bank of Family and Friends.” Borrowing from parents, siblings, or close friends lets you keep the tens of thousands of dollars in interest you’ll pay over the life of your mortgage loan within your circle, rather than handing it over to a bank. Another money-saving approach is to partner with another purchaser. Shared ownership is a growing trend. You’ll want to start by determining whether co-ownership with a particular person is likely to work. Then draft a written agreement to spell out how ongoing costs will be split and deal with other potential sources of contention, such as what happens if one of you wants out after a few years or if one of you dies. 6. If You’ll Be a Landlord, Be Prepared Some second-homeowners plan to rent out their properties long-term with the intent of eventually turning a profit. Others just want to rent out their property periodically as a means to offset expenses. Either way, you’re taking on the role of a landlord, which means more than just following your instincts. Finding good tenants or trustworthy vacation renters, understanding and preparing leases or short-term agreements, and dealing with ongoing management and repairs are just a few of the practical and legal issues involved. Also, the obligations of managing a long-term rental are quite different from those of a periodic rental. 7. Take Steps to Protect Your Second Home Protecting your property starts before you buy and continues long afterwards. You may want to purchase title insurance in case problems such as past ownership or debt claims on the property surface after the purchase. Your lender will require that you carry hazard insurance, to protect your property against damage from such causes as theft, fire, flooding, or windstorms. The cost of insurance for second homes is usually higher than for first homes, since you won’t be there as much. You will probably want to add liability insurance, covering you and members of your household for accidental injuries to your visitors. Thanks

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