Whether you're buying a second home for the first time, or your buying your third or even fourth home, there are numerous steps that you should take. Throughout the course of this brief article, you'll learn about just a few of the steps you should take in order to properly purchase a multiple home.
Does It Make Financial Sense?
The first step you should take when it comes to buying a new home is to ask yourself a question – "Does it make financial sense to purchase a new home?" Not only buying a new home, but the financial expenses that follow through and the consequences involved with buying a new home can be quite straining on an individual. You'll want to tally up your expenses in every walk of your life, including the amount of time you won't be spending at your new home. You'll want to spend some time building up your cash reserve and also factor in whether or not you're going to rent out your second home and subtract that amount from how much you have saved.
Decide Where And What Type Of Home You Want To Buy
Before you purchase a second home, make sure that you purchase in an area that renters will wish to buy into. As you won't spend the majority of your time in that home, chances are, you'll want to rent it out to recoup any losses that you incur. As such, make sure that it is in an area that might be amenable to potential renters. The type of home that you're purchasing is also quite important. The demands of single family home is quite different from owning a multi unit walk up or condominium.You will want to take into consideration the cost of maintenance, as well. The type of home you wish to rent out might seem like good financial sense at the time, but keep in mind that multi home houses or condos cost a substantial amount more to maintain, and you might have to hire a superintendent or a home rental director. These are all factors that you have to take into consideration.
Tax Implications
Second time homebuyers need to look into two potential sources of taxation: property taxes (which are something that vary by both state and municipality) and income tax (if you decide on renting out the home, especially since you are not going to be at your second home during a majority of the time). Also, one of the deciding factors on the amount you will pay in property taxes depends on the neighborhood in which you are purchasing your second home. "Up and coming" properties tend to have higher tax rates, so keep that in mind. One of the best ways to go about avoiding high tax rates in such highly taxed neighborhoods is to buy property on the border of up and coming neighborhoods, that way you will avoid high tax rates, but you will eventually benefit from the over spill of neighborhoods that border neighborhoods that are slowly becoming popular.
Take the time and speak with a real estate agent regarding other ways in which buying multiple homes might be a viable financial option for you. To learn more, contact a company like The Gresham Group.
Share