Home, Part Deux. Your Getaway Place
The sun is out! Time to think about summer escapes and places to go to enjoy the wonderful landscape the PNW has to offer. Now is the time of year when I personally dream of that home in the desert or by the beach. A place to escape and call home…part deux. You can do it too! Here’s how.
There are a number of ways to invest and grow your nest egg. Real estate investments are an option considered by many, but are you ready for a second home? There are a number of factors to consider:
Type of Property
What are you thinking about? A vacation property? A vacation rental? A long-term rental? This should be the first item to decide on and each has their own set of pros and cons. For example, if you are considering a vacation property for you, friends, and family to use, location is a top consideration. How often will the property be used? How feasible is it for you to get there? How will it be maintained?
If you are thinking of renting it out as a vacation rental, make sure the mortgage you use allows for vacation rentals, the property is zoned for vacation rentals, and you have determined how the property will be maintained and managed.
You may also consider a long-term rental property. In addition to the finances (which we will address later), will you manage the property? What locations are you considering? Are rentals allowed in the area (some HOAs and areas have rules around this)? What rules and regulations around rental properties need to be taken into consideration?
The purchase price, down payment, and interest rates are just the first step. You must consider the ongoing expenses of maintenance, utilities, property taxes, insurance, and possibly HOA dues for a second property. If you plan on offsetting these expenses with rental income, do your expectations for rent match the market rates? What happens if there are vacancies? These questions must be taken into consideration.
There are also tax benefits that you may qualify for when owning a second property, along with additional expenses that may be written off depending on the property’s use and your situation.
How long to you plan to hold onto your investment? Three years? Five? Ten? Will you be investing in another property after you sell this one? Will you be moving into it when you retire? Penciling out potential scenarios is helpful when determining if a second property lines up with your investment goals.
If you are ready for an in-depth discussion to review your options, I welcome the opportunity to set up a meeting to answer your questions and help you make a plan.