Purchasing a second home can be a valuable investment for many, provided they have the means to do so. There are many reasons why you may wish to acquire a second property.
Personal reasons, such as curating a vacation home or a home in which you can develop until the day you retire can be intrinsically motivating. Not only that, but this can also prove to be a fantastic financial opportunity.
From flipping the house after development for a profit, or renting the home using services like Airbnb, it’s not hard to see why so many choose real estate as a valuable pursuit.
Purchasing a Second Home Considerations
But what should you consider when purchasing a second home, and how can you assess its value, not only in an objective sense but the value that also translates to your taste?
It’s worth asking these questions, because the more time we spend in this inquiry, the more informed we can feel when going ahead. After all, any pursuit tied to such financial investment is going be a risk, but with the following advice, you’ll be able to plan that well, all the same.
How You’ll Use It
Of course, this can seem like a silly question to ask. It’s not as if you’re going to purchase a second home, knock it down, and then sit on your property deck chairs and soak in the summer sun with your renewed stretch of space. That being said, your second home may not be utilized as commonly or for the same purposes that everyone else would.
For instance, maybe you’d love to curate this holiday home to one day serve as accommodation for your child flying the nest. Perhaps you want to register this property as a commercial space from which to run your home business at some point in the future, with all of the tax benefits that will include.
Not only does questioning yourself in this way grant you more of an understanding regarding where to go from here, but you’re more likely to choose a second hand-house low price friendly wonder cottage more suitable for your needs.
Value & Time
It’s worth noting that no real estate is divorced from the surrounding forces that mold its value and usability. Of course, time is perhaps the largest force impacting us all.
But more important than any philosophical platitudes as of the moment is how this will affect the value of your home. For instance:
- What are the investment metrics taking place surrounding the local environment?
- Are residential districts being constructed nearby?
Of course, this could be a good or bad influence on property value depending on how valuable those homes are.
It’s these outside forces that will translate to how valuable your property is, but you can also predict patterns based on past fluctuations. Seeing how the property may have been valued by assessing the housing market in that area for the last ten years can be a valuable use of your time.
Developmental Possibilities
It’s also very important to consider the developmental possibilities you will encounter. Some properties will be in protected environments, that is under extreme scrutiny regarding the limitations of construction rights.
If you hope to develop a home to be twice its size yet are doing so in an area of protected natural beauty, you’re likely going to fall short of your goals.
Of course, sometimes developmental possibilities can also pose a logistical issue. Maybe you’re interested in converting a very remote barn into a wonderful house you can one day retire in. This will cost much more in labor and resource allocations simply trying to achieve the most basic pursuits.
Security & Risk
Managing the security and risk of your second property is also important to consider. If you’re not going to live there in the interim, or you’re going to rent this out to Airbnb patrons, ask yourself these questions:
- How can you secure the property?
- How can you make sure that nothing untoward is happening there?
- What are the crime rates in the local environment, and how might you ensure the home looks occupied or is maintained by local hired help to prevent the worst from happening?
- If you’re purchasing a home on a fault line or in hurricane territory, what are the odds that you may encounter a devastating impact on your future plans?
It’s worth weighing everything up in this way because you never quite know how your plans will change.
Final Thoughts on Purchasing a Second Home
With this advice, we hope you can still go ahead with your amazing plans to purchase a second home, only to do so with clarity and informed conviction.