Many of us dream about someday buying a second home as an investment—and possibly for family vacations as well. Before you do, be sure to know what you are signing up for.
To start, calculate the expected income and total return, as well as understand the tax benefits and costs. You’ll want to decide whether to use a mortgage and set aside money for maintenance and repairs as well. This blogs shares information to help you determine if you should pursue a second home as an investment today, if you need to wait a little while, or if you should look elsewhere for an investment.
Big questions to answer
The big picture questions prospective buyers should ask before making a purchasing decision include:
-Would you want to own this property—even if you cannot rent it?
-Is it attractive to a large audience, not just you and your family?
-What are the pros and cons of the location, including distance to transportation and surrounding local businesses?
-Toilets, tenants and trash. Who will deal with these?
-What’s the exit plan?
-And, of course, how will you make money on this investment?
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