Saturday 15 June 2019

Buying a second home - is it worth it?

If you are lucky enough to be in a situation where you can even consider owning another home, then you must acknowledge the realities of doing so. It can be one of the most difficult things in the world if you’re not already a estate agent mogul who can afford to hire others to get the job done for you. And it’s likely you just want to buy out another place as a summer home, office or somewhere to rent out occasionally.

You want to be able to bulk out your lifestyle and live the way you want to, with the four walls around you you’ve always dreamed of. You want to invest your money and open up a portfolio, and find success in the way you spend and the returns you make. All in all, you just want to be healthier and happier, and having an advantage with real estate is one sure fire way to do that. 

It’s going to be a hard thing to take on, and hard to pay for, but it’s not an impossible idea to tackle. If you’ve got your eyes already set on a place you think would be a good fit for your family, career, and life goals, let’s think about just how practical your plans are. After all, you can do what you want with your money, but you should always want to do the smart thing with it! 

Firstly, Would it Be Worth it? 

When you think about it, there’s a lot of benefits to owning a second home. You’ve got a place to take a holiday every now and then, at little to no extra cost to yourself. You’ve got a place you can rent out and make money off of for every month you have a tenant living in it. And ultimately, you’ve got a lot of assets to your name; you’ve got two homes, an income strong enough to take them both on, and that can grant you a lot of power in the economic climate. 

But before we get too far into dreaming about owning more than just the place you currently live in, it’s time to stop and think for a moment: would it actually be worth the time, money, and energy to invest in another house? Do you have the income to buy, renovate, pay for the upkeep, or to sell on again? Do you have the time to take trips out to it every so often, just to check on the second property to your name? Can you even get another mortgage? 

That last question alone is going to be very bulky to try and answer; mortgages are the best way to afford a home, and when you’re already paying for one (and will be for another 5 to 10 years at least), it can be hard to face another one. The bank themselves are going to point this out to you, and depending on your payment history with the loan they’ve already handed over to you, they’re going to say yes or no. 

And if you’re looking to get a holiday home that’s abroad, you’re still going to need to look into your loan options. For example, using something such as a housing loan calculator singapore, you can try to ascertain the average interest rates for Asian countries. Thankfully, your options open up a little here, and you might be able to use a foreign lender to secure the right funds. But once again, would it be worth it to owe two different credit lines to two different institutions in two different countries? 

Secondly, How Far Away Are You? 

Your regular availability, and how flexible it can be, is also going to determine just how well you’ll be able to look after more than one home. Homes need cleaning out, bedding down, and repairing from time to time, and you’ve got to be there to make sure these tasks are carried out. So if you’re looking to invest in a second home that’s miles and miles away from you, even separated by an ocean or two, how often will you be able to get there? 

Sure, if you invest somewhere that’s far away, you can get the tenants you take on to do the bulk of the work. But if you’re not interested in renting the place out, and you can’t afford a plane or boat or train trips on a monthly basis, the state of this second property is going to drop. The value might even go down, and if you’re thinking of reselling at some point, this isn’t the best way to start out in your house flipping side hustle!

You could use a local housing or homeowners association to help you out here, of course, but you’ve got to be able to pinpoint where the best associations are. The real estate market can be a very fickle place, and you might have to wait years for a property to become available with a nearby HOA. And the comes the fee to be a part of one of these, which can be astronomical when you’re investing within a city; thousands can be spent each year, and even tens of thousands for anyone with a property in a capital city. They’ll take very good care of the home you can’t afford to visit on a regular basis, and they’ll uphold the integrity and value of the property for the future, but it’s definitely going to cost you. 

So, can you look after more than one home? Depending on your personal circumstances, such as the responsibilities already in your life and the amount of money you currently make each year, it might be more hassle than it’s worth. It’s not something you want to jump into, especially if you’ve got a family to take care of, so make sure you give it a lot of thought. 

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