Demand for second homes remains healthy despite a shifting housing market. With homebuyers from the Raleigh and surrounding areas looking for Wilmington and NC beach homes, now may be the time to buy that second home. Our Team Leader, Jill and her husband made this leap two years ago, and it’s paying off. Whether you’re dreaming of paradise or profit, master these 10 tips for a smart investment.
1. Resist the urge to impulse buy.
Don’t come back from vacation with the keys to a new house without having thoroughly researched your purchase first. If you buy on a whim, you may end up with a second home you can’t afford or that doesn’t fit your needs, or…you may think you will rent this out for vacationers and short term renters and the ordinances in the City or HOA Covenants do not allow for this.
2. Evaluate your needs and long-term goals.
Be realistic about what type of second home suits your lifestyle. If you’re looking for a weekend getaway, staying within a 2-4 hour drive of your primary home could be a good move. If you’d like your second home to someday serve as a retirement spot, assess the home’s accessibility and check out health care services in the area. Your REALTOR® on our team has all this info available.
3. Get to know the area through homeowner eyes before buying.
Even if you’ve been visiting the same vacation spot for years, you need to get to know the area from a nontourist perspective if you plan to buy there. Visit the place off-season, and talk to locals to get their take on the area.
4. Hire a local real estate agent. YES! We are here for you and this is our specialty.
Buying a vacation home outside your area can be tricky, as residential real estate is extremely localized. NC Pro Realty Group with Keller Williams can help you get to know the market.
5. Decide what type of home is right for you.
Think about how much time you’re willing to devote to maintenance when deciding between a condo and a single-family home. Condos are a good choice for buyers who only plan to use their homes occasionally and don’t want to deal with year-round maintenance. But if you don’t want to sacrifice privacy, stick with a single-family home.
6. Shop around for a mortgage.
The market changes constantly, so resist the temptation to take whatever terms your lender on your first home offers you. See what else is out there to get the best deal possible. Second home mortgages are different than primary homes. We have lenders that specialize in second homes.
7. Calculate additional expenses.
Don’t forget about insurance and maintenance when adding up the costs of your second home. Some of the most desirable areas are at a higher risk for hurricanes, floods or forest fires, so insurance for these areas can be pricey. Get several insurance quotes before making an offer. For maintenance, a good rule of thumb is to set aside 2 percent of the home’s value per year for upkeep and repairs.
8.Consider fractional ownership to cut down on costs. Or not.
If you buy a second home on your own, you may find yourself shelling out a lot of money for the amount of time you actually spend there. By pooling your resources with friends or relatives, many people can enjoy a vacation getaway for a fraction of the cost.
9.Look into tax benefits.
You don’t have to pay taxes on rental income if you rent out your home for fewer than 15 days a year, but you can’t deduct any rental expenses. If you rent out your home for more than 15 days a year, you have to report the income, but you can deduct expenses like maintenance and cleaning.
10.Rent your home out for extra income.
If you need extra cash to supplement your monthly mortgage payment, renting out your second home could be a good option. Being a landlord comes with more responsibilities than many people realize, so familiarize yourself with landlord/tenant laws and the Fair Housing Act before renting out your property. Long term rental and short term rental are very different and the return on investment varies. We can help you calculate the best options for you.