Tips for buying a second house
As a seasoned homeowner, you are likely aware of the responsibilities associated with property upkeep and years of mortgage payments.
Perhaps with this experience under your belt you have thought about buying a second home in order to establish a vacation spot, secure a retirement home or make a future investment for your children.
Whether you hope to accomplish one of these aims or simply build up your assets, buying a second property can bring a variety of benefits.
However, before you head to the bank, you may wish to take note of the following handy tips for buying a second house…
1) Know your bargaining power
This is leverage that you can use when negotiating with lenders on a new mortgage. Investor borrowers are the most sought after customers for financial institutions due to their proven credit history and potential for future business.
Use this to your full advantage!
2) Know what you are buying
It goes without saying that you want to minimise the risk of buying a property that will lose its value and sink your finances, but achieving that is not always so straightforward.
It is important to do your homework on the surrounding market, local rental figures and general state of the economy. What type of tenants will you be targeting?
Supplement your own research with some advice from experienced investors and cover all of your legal bases every step of the way.
Read all of the fine print!
3) Know the costs
Owning tenanted property is not all about collecting rent and cashing cheques – maintaining your second house and finding tenants can be a costly endeavour.
Taxes can also make a real impact on cost – it is worth speaking to a local advisor to find out what you will be obligated to pay and what you can write off.
Be meticulous with your calculations!
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For many greenhorns, it is advisable to do a lot of reading and wide consulting as to what to expect. This could include seeing a financial planner to determine how to budget, goal setting, how to go about achieving the goal etc, a lawyer to advise on a structure if need be whether it be for asset protection, tax minimisation, future proofing, wills, power of attorneys, succession planning etc, an accountant to advise on your financial health etc. Don't discount the value of experience ie your family and friends who may have been there and made mistakes and learned from them.