7 Tips for Buying a Second Home
As the real estate market recovers, it has become easier for homeowners to buy second homes. Some of these second homes will be vacation properties in attractive getaway areas and others will generate income. Depending on their goals, second home buyers are considering investment properties they intend to flip (buy cheap, refurbish and sell at a higher price), or properties they plan to lease to generate residual income.
Even if you can afford to buy a second home, why would you send more than you have to? The following tips will help you get the most value at the best price.
Be Flexible with Location You may love the ocean, but an oceanfront beach house might be out of the picture. Yeah, pretty expensive. If you look a mile or so from the shoreline you’ll still be close to the beach but you’ll probably find something more within your budget.
Do you enjoy a forest setting? There are cabins and homes in rural areas in mountain communities that sell for 30% less than those in the city or in areas that target tourism. Scale down the square footage and you’ll find even better deals.
Look For Fixer-uppers Let’s talk again about investment properties. Are you handy with a hammer? You might want to consider looking at dilapidated or abandoned properties. There are plenty of homes on the market that could use a little love.
For instance, properties owned by aging people who haven’t the strength or money to maintain their homes and grounds, sell for much less than their good condition value. They might be worthless in comparison to similar well-maintained properties in the area but because they require refurbishing, remodeling and/or repairing you can pick them up for much less. Put the work into these diamonds in the rough and make several thousands of dollars by reselling to other investors, flipping, or selling the contract.
Know what you’re looking for, where you want to locate and stick to your plan. Don’t be tempted to buy something that doesn’t fit the profile of the property you’re looking for. The next section is one in which you’ll really want to stick to the plan. Phenomenal deals can come your way.
Check Out Tax Defaulted Properties What is a tax-defaulted property? When property owners fail to pay taxes, their homes are said to be tax defaulted and are at risk of having the county seize the home to pay for delinquencies. Homeowners are given a period of time called the redemption period, in which to pay their taxes and fees and if they don’t, these homes are auctioned off to the highest bidder.
Many people purchase investment properties and second homes this way. You will come across some great deals. In fact, you might be able to purchase properties for pennies on the dollar. Resist the urge to risk purchasing anything that doesn’t fit the profile. We’ll talk more about this in a future article.
Think About Abandoned or Condemned Properties If you come across an abandoned home or one that has been vacant for a while, it’s a good bet the property is attached to a motivated seller. When a seller is motivated, it means they’re willing to negotiate a lower price for their home. They probably want to get this property off their hands—quickly.
This means the deck is likely stacked in your favor. There are many ways you can generate income from a property such as this. Even if you’re not interested in buying, you might be able to work out a property management deal in which you agree to help the owner lease the property and pay you a fee for managing it.
The Family Trust Most of the assets of an inheritance stay within families. Mom and Dad or Grandpa and Grandma buy vacation properties, fishing cabins in the woods or other types of real estate that are then passed down from generation to generation. Families gather for holidays or share use of the homes during summer vacation. But there’s another way everyone can benefit.
A good deal can be enjoyed by siblings or other family members by being made part of the family trust. Individual families that may not have been able to purchase on their own can share the expense of a home.
There are many ways to own a second home. Use your imagination or connect with a real estate investor to help you find the best case scenario in a prime location.