Here are five things you need to know before taking the leap.
1. Prices are at all-time lows
In many second-home hot spots, prices are still close to their five-year lows. When the real-estate bubble burst, some of the hardest-hit markets were vacation destinations. Many vacation home areas experienced overgrowth and may now be suffering from foreclosures.
2. Think ROI
Consider the possible return on your investment. Whether or not you decide to rent the home out, you will want to consider buying a place that has good rent potential. That’s because a home’s rent ability can affect its resale value. Before you bid on a house, make sure the homeowners association or township allows short-term rentals.
3. Don’t count on rental income
If you are planning on counting on rental income to cover the costs beware. According to HomeAway.com, a typical second home property rents out just 17 weeks a year. Make sure to account for the weeks the home won’t rent. Plus, you’ll need to pay for cleaning, maintenance, insurance, and maybe management fees. Make sure to plan on the maintenance costs of the property being at least 15% of the income.
4. Your mortgage rate depends on how you use the home
How you use the home depends on the mortgage rate you will receive. If you plan to use the property primarily as a second home and you’ll pay about the same mortgage rate as you would on a primary residence. If your plans are to use the home for rental income and need that income to qualify for the loan, you’ll need to have as much as 25% for the down payment and pay up to one percentage point more in interest.
5. Take advantage of tax benefits
Talk to your tax guy before you buy. If you rent the home out for two weeks or less you won’t have to report a cent of income to the IRS. The good news here, you can still deduct property taxes and mortgage interest. On the flipside, if you stay there for less than two weeks or 10% of rental days, you can deduct operating costs in addition to interest and property tax.
But where should you buy? According to CNBC here are the top places to buy a second home. If you are thinking about buying a second home I can help you find a professional agent in that area.
Comments are closed.
Needham MA Real EstateNeedham, MA - $7,250
389 Grove St - Rentals - - Rooms:15 - Beds:5 - Baths:5/12 hours agoNeedham, MA - $700,000
1 Emerson Pl - Single-Family - Colonial - Rooms:7 - Beds:3 - Baths:1/1Needham, MA - $1,799,000
18 Starr Ridge - Single-Family - Colonial - Rooms:10 - Beds:5 - Baths:4/2Needham, MA - $725,000
473 Great Plain Ave - Single-Family - Cape - Rooms:9 - Beds:4 - Baths:2/1Needham, MA - $1,499,000
55 Pond St - Single-Family - Colonial - Rooms:11 - Beds:5 - Baths:6/1
Wellesley MA Real EstateWellesley, MA - $1,690,000
9 Priscilla Circle - Single-Family - Colonial - Rooms:10 - Beds:5 - Baths:5Wellesley, MA - $2,700
822 Worcester Street - Rentals - - Rooms:6 - Beds:2 - Baths:1Wellesley, MA - $3,495,000
43 Bristol Road - Single-Family - Colonial - Rooms:12 - Beds:5 - Baths:8/2Wellesley, MA - $1,395,000
12 Glen Rd - Single-Family - Colonial, Victorian - Rooms:12 - Beds:6 - Baths:3/1Wellesley, MA - $2,200
20 Morton Street - Rentals - - Rooms:4 - Beds:2 - Baths:1
Dedham MA Real EstateDedham, MA - $559,000
47 Cunningham Rd - Single-Family - Split Entry - Rooms:10 - Beds:4 - Baths:24 hours agoDedham, MA - $649,999
95 Country Club Rd. - Single-Family - Colonial, Contemporary - Rooms:9 - Beds:4 - Baths:2/116 hours agoDedham, MA - $250,000
25 Boathouse Ln - Land - Acres:0.37Dedham, MA - $250,000
25 Boathouse Ln - Single-Family - Cottage - Rooms:1 - Beds:1 - Baths:0/1Dedham, MA - $699,000
21 Church St - Single-Family - Antique - Rooms:9 - Beds:4 - Baths:2/1
- Grand Opening for New Cancer Center and Surgical Pavilion August 26, 2014A public grand-opening celebration for the new Beth Israel Deaconess Cancer Center and Surgical Pavilion will take place at Beth Israel Deaconess Hospital-Needham on Sept. […]
- The Charles River Center 4th Annual 5K Road Race and 1-Mile Walk August 26, 2014This USA Track and Field-certified course begins at The Charles River Center at 59 East Militia Heights Drive and loops through the scenic back roads of Needham and Wellesley . […]
- Patrick's buffer bill veto knocked by area lawmakers August 14, 2014A Needham state representative said Gov. Deval Patrick was misinformed and his staff declined to meet with her before he vetoed a bill last Friday that would have authorized the state to purchase a highway buffer zone along Interstate 95. Patrick vetoed the bill saying it would effectively "prevent the construction of a much needed affordable ... (more) […]
- Grand Opening for New Cancer Center and Surgical Pavilion August 26, 2014
- Mobile payments firm Paydiant opens new HQ in Newton August 27, 2014Paydiant , a mobile payments tech firm, has moved its approximately 75 employees into a new 18,000-square-foot headquarters at 275 Grove St. in Newton's Riverside Center, which is twice the size of its previous Wellesley location. […]
- Wellesley mobile tech firm Mobiquity adds $5M in funding August 26, 2014Mobiquity Inc., a Wellesley-based mobile technology services firm, announced Tuesday it has closed an additional $5 million in funding, bringing total funding to date for the three-year-old company to $24 million. […]
- Longtime Democratic activist Deb Goldberg banking on youthful field... August 26, 2014In her campaign for state treasurer, Deb Goldberg is banking on a strong, youthful field organization, which she credits with her high vote total at the Democratic State Convention in June. […]
- Mobile payments firm Paydiant opens new HQ in Newton August 27, 2014
- Blue Hills Regional Grad Michael Riley '13 Helps Wishes Come True for ... August 26, 2014Most nineteen-year-olds are busy working or going to school, leading a hectic social life, and trying to figure out their place in this complex, topsy-turvy world. […]
- Being 'Faithful' to Puppy Doe August 26, 2014I am always honored to stand among the "faithful" crowd of protesters who turned out again yesterday in memory of the mutilated puppy known the world over as "Puppy Doe" - hers possibly the most famous face of animal cruelty that history will ever record. […]
- Father of missing Avon man says he believes his son is dead August 18, 2014The father of an Avon man prosecutors say was kidnapped on New Year's Day gave his first public interview to 7News eight months after the disappearance. […]
- Blue Hills Regional Grad Michael Riley '13 Helps Wishes Come True for ... August 26, 2014