5 Questions to Ask When Buying a Second Home

The eventual return to the office for many homeowners was a welcome prospect. It was a sign of normalcy everyone was used to before the pandemic, and for some, it meant getting out of an overcrowded home.

But for those who have permanently situated themselves in the work-from-home reality, getting their home to meet their work and lifestyle needs has become a top priority. As a result, demands for second homes have risen, and the price appreciation for such homes has grown even faster than for primary residences.

There are more things than prices to consider for those venturing out to search for a second home. Below, the team at Prevu Real Estate has put together a quick guide to the top five questions you should ask when buying a second home.

Can you afford the costs of a second home?

Seasoned homeowners probably know the realities of buying a house, especially the financial requirements. Anyone who has gone through a primary residence purchase knows the rigorous saving it takes to set aside a sizable down payment, followed by possible transactional costs such as escrow fees and mortgage origination fees. 

Purchasing a second home is no different. In addition to the steep closing costs, mortgage rates on the property can depend on various factors. For those thinking of buying a second home, renting the property out for additional income might cross your mind, but a mortgage lender may adjust the interest rate accordingly if it is an investment property and not just a second home, resulting in a larger mortgage payment.

There are also maintenance and upkeep costs that will add to your current expenses for your primary home. Be sure to ask yourself if these are costs you can maintain into the future, even if any emergency repairs might come up.

What is the best area for your lifestyle?

Choosing the right location plays a huge role in purchasing a second home. While commuting to work may not be on the list of priorities, in this case, there are other matters relating to travel that you should consider.

You may find an ideal home with a boatload of features you like, but it may be far from essential things. First and foremost, you should consider how far the second home will be from your primary residence. It may be tempting to look forward to an intercoastal getaway, but the plane tickets can add up, and it might be a burden if something comes up maintenance-wise. 

Still, if long-distance travel to your second property is not an issue, you can focus solely on what amenities you want nearby. After all, this is your vacation home, and you should put in all the effort possible to make sure you will always enjoy yourself whenever you come. Popular holiday areas tend to get crowded during peak seasons, and the new beach you might be near can be packed whenever you decide to travel.  

Will this eventually be an investment property?

Some homeowners are content with their second home serving as a personal getaway. But no matter how you use it, a second home always has the potential of becoming an investment property and an additional revenue stream via rental income. 

If you decide to purchase your second home as an investment property, be prepared to pay a higher interest rate on the mortgage. Investment properties usually come with a slightly higher interest than a primary residence or vacation spot, and the income generated will be taxable. 

There are a host of expenses associated with the upkeep of the property. If you expect to rent the home out, you will have to think about maintaining it for your guests. Will you do it yourself? Will you have fast access to it? If the area you chose is far away from your primary home, it might make sense to hire a property manager.

How will the property be managed?

A property manager might be the easiest solution for those looking to rent out their home. Although it is an additional expense, you can rest easy knowing that you will not have to jump into your car and drive to the property to fix a broken sink or showerhead. 

But even if you decide to use your second home as your vacation destination, property management remains an issue. Consider what features the home has before buying, especially if the conditions are severe during winter or summer. Keeping the correct temperature on the property is essential to ensure you won’t have any maintenance issues upending your savings.

What will the maintenance costs be down the line?

Once you decide where your ideal vacation home will be, you can consider the maintenance costs. For example, if you are searching for a cabin-style estate by a ski resort, you will have to think about the infrastructure and piping. Upkeep of those details is essential to avoid huge costs in the case of a pipe bursting.

Maintenance is also a factor for evaluating homes located by the beach. Over time, the salty air that drafts from the ocean can affect the house's roof and walls. But as long as you have a plan of action and readiness to pay for the necessary coverage, you can rest easy in the case of any unforeseen circumstances.