With the motivation of quick property flipping largely behind us, second-home buyers nowadays are more geared to enjoying their property rather than looking for a quick return on investment. Familiar with your desired location amenities, such as weather and traffic patterns, proximity to a major metropolitan area...
How to buy a second home
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If you have been toying with the idea of buying a second home, now could be a good time to take the leap. Interest rates are still low, and home prices are rising but within reach.
Ready to buy a vacation home? Check out the lowest mortgage rates.
Scouting the marketOne way to start the search for a second home is to find a real estate agent who is familiar with your desired location. This partner could fill you in on aspects such as weather and traffic patterns, help you evaluate the location and amenities of a property and provide information about comparable sales.
And, with an eye to the long-term value of the property, the agent could fill you in on historical prices and how comparable sales have fared, as well as resale prospects. Factors that tend to have a positive impact are proximity to a major metropolitan area, ease of access and availability of four-season amenities.
If you've already decided on a location, start searching for a mortgage that fits your needs.
Gauging your returnWith the motivation of quick property flipping largely behind us, second-home buyers nowadays are more geared to enjoying their property rather than looking for a quick return on investment.
Still, you should consider that you will be away from the property much of the time and factor in additional maintenance costs, such as having a management company check for water leaks or frozen pipes.
Getting insurance for a second home may be more challenging than for a primary residence, depending on location. Typically, your second home is located farther away, and insurance companies might be concerned the home will not be properly maintained.
If you are considering a second home on the beach, factor in the cost of flood insurance in addition to your home insurance. It has become more difficult to get flood insurance in coastal communities, and the cost has grown exponentially in some markets.
Mortgage requirementsAs for obtaining mortgage financing, lenders look for the same factors as they do for a mortgage on a primary residence. The difference is that you have to qualify for a second-home mortgage in addition to any mortgage debt on your primary home.
Typically, you will need to come up with a down payment of at least 10 percent of 20 percent, meet credit standards and debt-to-income requirements, and provide documents for income and asset verification. If you have a good relationship with the mortgage lender on your primary residence, that might be a good place to start your quest for a second-home mortgage. or income-property;
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Are you interested in investing in real estate or are simply looking for a few helpful tips to improve your game? If the market’s right, investing in real estate can quickly earn you a high return. Even if you’re not a realtor, you can still invest in the market.
In fact, we spoke with one car accident lawyer in Surrey who recently made over ten thousand dollars in real estate investment just on the side! So how do you get this kind of success?
Here are a few real estate investment tips to get you started.
What Are Your Financial Goals?
To start off, you need to review your financial goals and your financial standing. What are you trying to accomplish by getting into the world of real estate? It’s a business that thrives on high risk, high reward. Are you sure this is the form of investment that will get you to your goals?
While there is a lot of money in real estate, it’s definitely not a place to “get rich quick” and a bad market can quickly ruin your assets. Once you have some clear goals in mind, it’s time to start small and work towards them step by step.
Check Your Credit Report
How solid is your credit report? If you plan on investing in real estate, it’s likely that you’re going to need to get a big loan from a bank. If you’re not bringing a good credit score to the table it’s unlikely you’ll be able to secure that $35,000 loan you need to flip a property. To do a quick check-up on your credit report, use the website Credit Karma. It’s a free service that updates your score on a weekly basis without doing any damage to it. Credit Karma will even provide you with a breakdown of your score and information on how to improve it.
Pay Attention to Location
Location is obviously a large factor in choosing where your property is going to be. Typically, you want to find the best area you can. By finding the best area, you’re able to avoid taking any sales damage due to factors such as proximity to a school, high crime rates, and the friendliness of the neighborhood.
However, you do want to buy the worst house in the best area. The reason being is that by improving real estate you’ll drastically be able to improve the value of the property up to the level of the current neighborhood.
Know Your Tax Benefits
You’re running a business when you invest in real estate, so there’s a lot of tax related benefits out there which save you a lot of dough. The federal government loves when people improve real estate and they’ll reward you for it. The first big break you’ll receive is a depreciation write-off. This write-off allows you to factor in the real estate's depreciation in next year’s taxes.
There is a number of great write-offs like this, so make sure you get a good tax advisor. This advisor will guide you through all the bits and bobs of tax law to save you as much money as possible on your investment.
The One Percent Rule
If you’re unfamiliar with the one percent rule, then you’re about to thank me. It’s perhaps the most important rule to know for real estate. The rule is simple: when you rent out your property, you need to make 1% of the cost of your investment back each month. Follow this rule when you price out your property in order to earn back your money in a timely fashion.
Get To Know Other Investors
Making connections in your new field is vital. It allows you to gain knowledge about the industry that you may not have had otherwise. By getting close to investors, you can learn from people who have a lot more experience than you on the do’s and don’ts of the industry.
To meet other investors, head to conferences and local networking events. You can find out about these through your local business bureaus and social media networks such as LinkedIn and Facebook.
Read, Read, Read
Finally, read good books often. Read up on brilliant investors like Warren Buffett, read the old stuff so you know where the industry has been, and dig into new books so you can see where the industry is headed. By reading often you’ll always stay sharp and ready for your next investment.
Investing in real estate is a great way to make an income, but it’s a long process that takes work. Using these tips you’ll be able to hit the ground running and make your financial dreams viable.
JULY 29, 2017 BY CHRIS PORTER
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