Logistics of Buying and Owning a Second Home

There is nothing like the beautiful and scenic views that owning a second home comes with. However, there are some logistics involved in buying and owning a second home. 

These factors make it necessary to know what lies ahead of you before purchasing your new vacation getaway. It would be best to look at real estate for sale before buying or thinking about buying a second home.

Financing Your Second Home

The first step in the logistics of owning a second home is looking at your financing options. You need to know what you can afford and see if you qualify for multiple mortgages on the same property. 

One thing to remember when buying a second home is that it needs to be a place to vacation and not a primary residence. If you are buying your second home as an investment, then it is likely that you will need to purchase more than one mortgage.

Location

One of the first factors you must consider when finding logistic information on owning a second home is the location. You should never buy a vacation home without knowing where the location is. 

Know what you will be able to do in the near future and long term when it comes to transportation. Is there a hotel nearby that you can stay in when visiting? If not, then look into real estate agents that can find your second home for you.

What Will Your Vacation Home Be Used For?

Another factor to consider is what you will be using the vacation home for. Will you need more than one bedroom or room for your guests? You also want to think about any guest cottages that are on the property. 

Another thing to keep in mind is if you plan on renting out your second home while not there, then you will have to consider having a guest home for your visitors.

Home's Layout

You should look at square footage and how many rooms are in the house. It also helps if there are floor plans available. You should also be aware of the age of the home and if there are any renovations that you would like to do yourself.

Maintenance and Upkeep Is Important

The fourth factor that you need to consider before purchasing your second home is maintenance and upkeep. This will affect how much you spend on your vacation property each year. 

If you are looking into buying a second home to rent out for profit, you must hire maintenance. If the property is big enough, then you should consider hiring help around the house as well.

In conclusion, there are many factors to consider when looking to purchase a 2nd home. What will you use it for? Does the location fit your needs? How often will you be staying there? Etc. 

Take all of your options into consideration, and do your research, so you can find the perfect 2nd home.

Buying a Second Home: Is it Worth the Investment?

One of the top things that everyone hears about in terms of investing is to invest in real estate. The market is hot right now, with the power resting in the hands of the sellers and renters. If you’re considering getting a second home for your own vacationing purposes, renting out the space while not in use can be a great source of additional income. 

But is it really worth the investment? Here are four factors influencing the costs and profitability that will help you determine if buying a second or vacation home is really worth the investment for you.

Maintenance and repairs

When you buy property, you will have upkeep costs. Older homes are notorious for needing extra care and attention, even if the initial downpayment is less. Planning your budget according to the age of the structure and any known issues can help you avoid overspending. 

If the property requires too much care, then you may want to look for another option. In most cases, it will be a lot better to get a nicer, newer home that has a higher cost but will need less repairs than it is to get a cheaper but lower quality home.

Making money using your home as a vacation rental

Knowing your audience can help you make cover expenses for your property. Millennials make up 40 percent of travelers who search for web rentals. Advertising online, having an excellent SEO program, and using social media to connect to this audience is crucial to getting the right exposure should you use your investment for rental purposes. 




With a great SMM team or brand management company, you can successfully market your rental to reduce vacancies and increase the ROI of having a second home.

Managing tenants

Unless your second property is in a housing development with a homeowner's association, it might be best to hire a professional property management firm to take care of your rental. These experts collect rent, repair household systems, mow the lawn, vet potential renters, and arrange marketing and advertising. 

When you want to invest in the property without the everyday work, these agencies are the best option to remain hands-free. This is especially important for busier homeowners who don’t want to let a second home property turn into a second job.

Market awareness

Before you buy a vacation house or rental property, it is important to investigate the local market. Is there a shortage of houses for sale? Is the area vibrant and diverse enough to draw in the younger crowd? 

How many parks, shops within walking distance, and fine dining establishments are nearby factor into a tourists' decision to stay in a particular location. If you are looking to purchase in your top vacation spot, then you understand the importance of accessibility. Right now, it is more costly to buy a home, but that also means that you will get a greater profit from renting it. 

Waiting for a buyer’s market may result in a lower ROI when it comes to renting the property out again, so be aware of your financial needs and if your current budget can sustain a higher initial cost for greater profit afterward, or if you’d be better off waiting for lower starting costs.

Before you take on an additional mortgage or the responsibility of owning multiple properties, it is a good idea to consider why you want another house. Whether you plan to take on new property as the beginning of a grander real estate investment program or just to have an available vacation home for

Maximizing the Investment Potential of Your Second Home

There are plenty of reasons to buy a second home, from the convenience of being nearer to family to the luxury of having an always-available vacation destination. Today, more and more people are buying a second home as an investment — in fact, at least 37% of buyers claim that their second home was purchased for this very reason.

But seeing a return on this kind of investment goes far beyond simply buying another house. It pays to set your priorities straight, to do your research on the local area, and to get the most out of tax benefits while minimizing unnecessary costs along the way.

Read on for invaluable advice from real estate experts, so you can maximize the investment potential of your second home.

Buy Smart

If you’re buying a second home it means you’ve bought a house before and you know the ropes — to some extent. While buying a second home also involves a down payment, a mortgage, and other associated costs, there are some differences to be aware of the second time around.

Your second home probably has a more specific use, so it’s important to make sure that you choose an appropriate property. A vacation home should have all the amenities you require for a relaxing time away from your primary residence, while a home purchased to be closer to family should provide you with enough space to host loved ones during family gatherings. Buying the wrong kind of home for your needs could force you to spend more money later on to adapt the property.

Once you’ve found your ideal second home, you’ll need to get your finances in order. Lenders are more wary about second home loans and often require a higher down payment — up to 25% in some cases. Although a down payment of at least 20% allows you to avoid mortgage insurance and minimize interest payments, overpaying will affect the value of your investment. Finding this balance is an essential part of getting a second home.

Location Matters

When it comes to maximizing the investment potential of your second home, it may be a cliché, but it really is all about location, location, location.

Housing prices across the US remain relatively low, making it a good time to buy property as an investment. When choosing a vacation home or investment property, there will be multiple cities in the US that can meet your needs; to narrow it down, compare the real estate markets of states or cities you’re considering. 

Arizona, for example, is a popular vacation locale due to its pleasant weather and an especially smart choice in the current economic climate. Experts predict that prices will rise in and around Phoenix, with single-family rental properties and apartment complexes accounting for much of the growth. 

Fortunately, interest rates are reasonable and home prices aren’t anticipated to exceed local incomes, so it’s also a stable market to buy into right now.

Wherever you wind up, choose somewhere that has steadily appreciated over the past few years and is predicted to continue into the future, as this will boost the value of your investment.

Know Your Tax Benefits

A number of initiatives and tax breaks can help you make the most out of your property investment — you just have to know what they are.

If your second home is for personal use only, you may be able to deduct mortgage interest on the second property. The amount you can deduct will depend on the combined mortgages of your first and second home. 

You may also be able to deduct real estate taxes, property taxes, and the interest on a home equity line of credit you use for improvements to your second property.

If you plan to rent out your second home, there are a variety of potential tax deductions available to you, organized into three levels. First, if you rent out your home for fewer than 14 days per year, you can enjoy tax-free income on that rental property.

If you rent out your home for more than 14 days, but you also use it for more than 14 days yourself, you qualify for the second level of tax breaks. That means, while you’ll still pay tax on the rental income, you’ll qualify for partial deductions on costs associated with renting out the house, from repairs and utilities to association fees.

Finally, if you rent out your property for more than 14 days per year and use it for fewer than 14 days per year yourself, you’ll pay tax on the rental income, but all of the costs associated with renting the property will be deductible.

Sell Smart

1031 Exchange

One way people maximize the investment potential of their second home is by using a 1031 tax-deferred exchange when they sell their house. If you’ve only been using the property as a rental, this is an excellent route to take, as the house does not qualify as a personal-use property.

The 1031 exchange essentially involves reinvesting any profit from your property into buying a replacement property in quick succession to selling. This allows you to defer any taxes on that property. It can be tricky to understand, so it’s vital to consult a real estate professional who is familiar with the process.

Capital Gains

While a 1031 exchange can be useful if you’ve been renting out your property, there are also benefits to living in your second home when it comes to selling it later on.

If you live in your second home for two out of the five years immediately before selling it, the property is considered your primary residence, and you can exclude up to $250,000 in capital gains as a single person, or $500,000 if you file as a couple. 

Even if you didn’t live there for a full two years out of the past five, you can still qualify for partial exclusion based on a ratio of how much of the time you spent there.

Maximizing the investment potential of your second home can involve a lot of work, research, and a steep learning curve; but by familiarizing yourself with the market, the area, and the law you can make a huge difference to your return.

Contributed by: Aderra Condominiums' sales are headed by Melanie Sanders of RE/MAX Platinum Living. Melanie comes with 25 years of experience as an Associate Broker/Team Leader, specializing in New Homes and Model Home Sales. Melanie was the former Vice President and Designated Broker of DR Horton and Ryland Homes, running sales and marketing. Melanie and her team have the knowledge, experience and friendly attitude required to manage all aspects of sales at Aderra.