If you think that buying a second home is a hobby of only those with an insane disposable income, then you’re wrong. In a recent survey, at least 22% of the respondents were planning to buy another house or 7% of them already had one.
Whether the second home is meant for downsizing — hello, retirement and empty nest — or investment (perhaps you want it to be rented), it still requires caution, responsibility, and common sense, especially not to make these types of mistakes:
Not having enough money
Unless you can pay in cash, the second home would still have to be purchased under mortgage. But it gets trickier this time around as most likely you already have another home loan to pay off. This means that lenders would require you a higher down payment and proof you have substantial cash reserves at least worth six months’ worth of repayments for your second loan.
Know too that having a second home is spending twice for utilities, maintenance, and almost everything else. Spending also doesn’t stop even if the house is already earning, although the exact amount may be considerably less.
Not getting yourself a real estate attorney
In an article by Robert Sanchez in 5280, he cites that getting an affordable home in the city has been increasingly difficult. However, it becomes even more challenging if you end up buying a property with attached liens or encumbrances or the sale contract itself has serious loopholes.
Although having an attorney during the sales process is optional, you can be rest assured you don’t spend thousands of dollars in future litigation if you work with a real estate attorney in Denver like M-S-Lawyers.com.
Choosing a less-ideal neighborhood
The address of your second home matters, particularly if the purchase is meant for investment. First, you want to make sure the value of the land increases in the future. That can only be achieved if it’s safe, is progressive, or is part of an urban plan. Second, it captures your strategic market. There’s no point in buying a two-bedroom home in a suburbs if you’re targeting young adults who prefer to be in a condo unit in the CBD.