Written by: Emily Joswiak • September 29, 2022• Home

What To Consider Before Buying a Second Property

Many people think about getting a second property. Before you sign the dotted line, here’s what you should plan and consider before buying a second property.

If you’re a seasoned homeowner and almost done paying off your mortgage, you might be thinking about purchasing a second property. Your second property can be an investment, vacation home, or rental property. However, you’ll likely obtain a second mortgage like with most property purchases. Before you search for another place to call home, here’s what to consider before buying a second property.

Can I Afford a Second Property?

This may seem obvious, but seriously, you should calculate your finances before purchasing a second property. As a homeowner, you know the strict financial requirements of obtaining a mortgage. However, when inquiring about a second home, things get a little more serious. Your debt-to-income ratio will greatly influence your down payment and interest.

Buy or Build?

Something old, something new, or something customized? When you inquire about purchasing a second property, you have the option to buy a home off the market or buy a plot of land and build the home yourself. There are a lot of pros and cons to building a house.

However, when you build a home, you can get a construction loan which helps finance the home you’re making. You won’t have to worry about dishing out large amounts of cash to build the home of your dreams.

How Will I Use This Property?

Why do you want a second property? For family functions, to rent out to tenants, or use as an investment? This question isn’t important if you’re solely using the property for vacations. However, if you’re using this property as a rental, it’s essential that you create a strategy as early as possible to ensure you will have enough rental income to help pay off the home’s expenses.

Who Will Maintain the Property?

Before you buy a second property, you should consider who will upkeep it while you’re gone. If the property is near your home, it may be easier to look after the property and perform regular maintenance and upkeep. However, if the property is far from your primary residence, it’s important that you develop a system to ensure that your property is safe.

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