Did you know interest in buying a second home grew 100% in 2020? We can guess among the reasons why: the wish to escape the city during the pandemic, the need for a different kind of space, or simply a desire for a change of scenery.
Some people want a vacation home and see they have either the savings or the equity for it, others need more space now that they no longer commute to the office. Buying a second home is a great way to invest in real estate, and there’s no better time than the present for fixing up either your first home or the second one, now that you have an option as to where to sleep. Or of course you can upgrade to a better place, and keep your old home as a rental.
Just be clear about what your budget is, and discuss it with your financial planner—because how you use your second home affects your financing options and ongoing costs. Talk it over with your mortgage broker to see whether you even qualify.
Don’t forget, location affects the scenario as well. Maybe you don’t necessarily need space for your family, but need a location that gives everyone a way to be outdoors during part of their day. If that’s only part of the year, consider renting the home out short-term in the summer. Maybe your second home could be in another town… just a small condo to escape to, for a change, that your children might use as a campus-adjacent pad when that time comes.
Some things to remember:
Homeowners Insurance may cost more on a second home, and you’ll need a different type of insurance if you rent it out.
If the house is unoccupied most of the time, you’ll still need to pay utilities and invest in a security system.
You’ll need a budget for maintenance and for the cost of traveling to and from your first residence, too.
And of course, work with your real estate agent to hone in on what you want. Let them be your eyes and ears in what may take a little time to find. Most of all, enjoy the process. A second home could be an upgrade for your portfolio, your family, and of course, yourself.