A Must-Read Guide to Buying a Second Home
Whether you are bored of your old home and looking for a new one, in search of a vacation home, or you are looking for an investment property, there are a few things to consider before diving in. Purchasing a second property can be tiresome work if you don’t know what you’re doing, but with a bit of know-how, you can simplify the process. Here is a guide to help make buying a second home hassle-free.
Important First Home Decisions
Before you even think about a second property, you need to make a few important decisions about your current home. Although you are looking to purchase a second home, buying your first home was a huge achievement. Not only is a first home a milestone in most people’s lives, but you also gain experience in the property market. Not to mention, a first home investment puts you in good stead for buying your second. People who no longer want to live in their first property can either let it out or put it back on the property market.
Let Out Your First Property
If you are tired of your current property and you are desperate to find a more suitable one, letting out your first home could be the best solution for you. Homeowners can boost their income by renting their property out to tenants. They can opt to let it out on a long-term or a short-term basis, and it is a great way to make a passive income. When it comes to being a landlord, you get to make all of the decisions regarding your property. Some landlords are happy to do all of the work around the house, such as renovations, repairs, and even paying for certain bills. However, as a landlord, you can draw up contracts to suit your needs. If you don’t have time to check on the property, put together an agreement for your tenants that states that maintenance and bills are their responsibility.
Property platforms, such as Room Club, are great for people looking to rent out a property. Room Club is aimed at people looking to relocate within the UK, and getting your property on this online platform can help your property get noticed. For more information and to list your property, visit roomclub.com.
Sell, Sell, Sell
Homeowners who don’t want to rent their old home out can choose to put it back on the property market instead. Selling your home can save you the hassle of finding and keeping tenants. You won’t need to maintain the home or worry about upkeep. Instead, you can sell it then find a new one. If you decide to go down this route, make sure you get an evaluation on your home and do some research on property value in your area to ensure you get the best deal. The perfect scenario would be to wait for your property to appreciate before selling it. However, this may not be possible for some people. For example, people who are running late on their mortgage payments and those who desperately need to relocate for personal reasons, such as divorce or new employment, may not want to or afford to wait.
Reasons to Buy a Second Home
People choose to invest in a second home for many reasons. Firstly, some people simply do not find their current home suitable anymore and require a second home to move into. For example, if they are experiencing serious structural issues or if they are going through a separation with their partner and need to move fast. Secondly, a second home as an investment can end up being incredibly profitable, and buying it as a long-term investment can be a great little earner. Thirdly, people who enjoy spending a lot of time in a specific place may find purchasing a second home there rewarding. A vacation home for personal use can help you save money on accommodation, and it means you can nip over to your favorite place whenever you have free time. Not to mention, vacation homes can be treated as a rental property, too, as they can be let out when not in use.
Second Mortgage
People who are still repaying their first mortgage can get a second mortgage for both residential and buy to let homes. However, you should keep in mind the fact that you will probably need a larger deposit for your second mortgage. In addition, a good credit score and an income that can cover both mortgages is essential.
A Second Home to Live in
If you are planning to purchase a second home to live in, you should identify the reasons why you want to move out of your current home. Some people need to relocate due to the need to upsize or downsize. Growing families with new additions may find their current place too small for comfort, while growing children may require a larger room when they get older. On the other hand, you may find that your home is too large for your current needs and that a smaller property is better for your circumstances. Once you have identified the reasons for your move, you can begin the hunt for a suitable property.
Long Term and Short Term Investment
Investing in a rental property can be a savvy business move for prospective retail estate investors. As mentioned earlier, rental properties as a long-term investment can help you gain a steady income. With a buy and hold property, you will benefit from long-term equity and appreciation. You will receive immediate returns, and eventually, your investment can lead to 100 percent profit once you have paid off your property. However, when it comes to short-term investments, you need to be aware of the depreciation of your home. Not to mention, in order to gain a profit, you will need to find trustworthy tenants who you can rely on to make steady payments. Alternatively, short-term investments can be incredibly lucrative, and you won’t need to rely on tenants for income.
Fix and Flip Properties
House flipping is a popular short-term investment technique, and investing in fix and flip properties can give excellent returns in investment. If you do your research and you know what you are doing with fix and flip properties, you can expect a quick return and a high-profit margin. These home types are often purchased at below market value. Once bought, they are then renovated then re-sold for a hefty profit. Although the profits can be high, you need to have capital to begin with, and you also need to be ready to put in some effort. Flip and fix properties are often sold in a bad state of disrepair, and a lot of time and effort needs to be dedicated in order for them to be put back on the market. People who decide to choose this route should do their research on the chosen property, the area it is in, and they should expect the unexpected. Fix and flip properties can be a bit of a wild card, which means that nasty surprises, such as unexpected damage, can occur.
Purchase at Auction
Purchasing a property at auction can mean buying a second property at an incredible price. Auction properties can often be bought at a low price, and homebuyers will find less competition for this type of property. However, as a real estate investor, you need to make sure you do your homework. Auction properties come with tons of paperwork, and it is more suited to experienced real estate investors—or investors willing to do a lot of research.
Vacation Home
Whether your favorite vacation destination is a sunny spot in Spain or a beautiful little area in the South of England, having your own vacation home will enable you to visit more often and enjoy a cheaper vacation. Besides forgoing the cost of accommodation, you can skip out on expensive meals every night and inflated prices of alcohol at the hotel bar. Having a home in another location will give you the pleasure of getting to know a new place, meeting new people, and even getting accustomed to a new culture. You can even rent it out to other vacationers while you’re at home and vice versa.
Short Term Rentals
Another advantage to purchasing a vacation home is that you can turn them into short-term rental properties when you are at your primary home. Short-term rental platforms make it easy for homeowners to rent out their property for a short period of time. With these types of platforms, you can choose to rent out a room, specific areas of your home, or your entire property. Getting your property on one of these platforms is the ideal business venture for homeowners looking to make some money out of their second property. Furthermore, you do not need to buy let mortgage to rent out your property if you are only planning to do it for a few weeks in a year.
Bear in mind this article when thinking about buying a second home to make sure you make the right decision.
