Have you ever thought about purchasing a second home but couldn’t decide if it was the right thing to do?

Should I Purchase a Second Home
A second home may seem like a good idea. Especially if you like to spend a lot of time in one vacation spot or you want to live part of the year in another location. But there can be some pitfalls with a second home that you may not encounter with your first. You need to consider a few things before committing to buying another house.

Why Do You Want This Home?
Are you purchasing another home as an investment and plan to either spend a lot of time there or rent it out? Or do you just like visiting the area once in awhile and you’d rather have your own house than rent?
If you’re not spending a significant amount of time in the location where you’re considering a second home, it’s probably not worth the hassle or the investment. But if you plan to be there frequently and rent it out when you’re not there, like a beach rental, then it may be a good income opportunity for you.

Do You Have the Money?
Buying a second home is unlike buying a first home in that you can not apply for an FHA loan. There are only two situations in which you can get an FHA loan for a second home: 1) you got a new job that is forcing you to move before you sell your current home or 2) your family has outgrown your current home and you need to move to a larger home before you can sell the one you’re in.
If those situations don’t apply to you, you will need a conventional mortgage to buy a second home which means you will also need a decent credit score and have sufficient income for a second mortgage payment in order to apply.

Do You Have the Extra Income for Upkeep and Emergencies?
Just like with your current home, unexpected things will happen. Appliances will break, pipes will burst, and roofs will need repair. You will also need to be able to maintain the home which means, if you’re not living there full-time, you’ll need to hire someone to maintain the yard and look in on the property. If you’re going to rent it out, you’ll need to hire a property manager to handle the rentals and the upkeep.

Are You Going to Rent it Out?
If so, there are some other things to consider. For instance, you may not be able to rent it all the time so rental income is not guaranteed. There may be weeks or months that it sits empty, not generating any income to cover the mortgage.
Renters can also cost you money if your property is damaged above the cost of the security deposit. Another good reason to hire a property manager to check references and make sure the property is taken care of in your absence.

Are You Planning to Purchase a Second Home to Flip?
If so, think carefully. Especially if you haven’t done this before. If you don’t know what you’re doing, you could end up putting more money into the house than you can sell it for. There are also capital gains taxes to consider. If you don’t make a decent profit on your flip, you could end up paying most or all of your profits to taxes. And, depending on how long it takes you to renovate, you’ll have to pay property taxes, maintain the yard, and pay utilities all while working on the house.
One other thing to keep in mind as you’re considering the purchase of a second home . . . you’ll need to work with a real estate agent. It won’t save you any money to do it on your own as a real estate agent’s commissions are paid by the seller not the buyer. But having an agent to help you find the right property for the right price and review your contracts before buying is priceless. It can save you a lot of money in the long run.
The purchase of a second home may seem like a good idea, but be sure to weigh all your options, consider your finances, and the time and hassle involved before making the leap.