A Second Home: Take It or Leave It?

September 7, 2010 in Investing In Real Estate

 

For many, wanderlust is just a part of life. You buy a beautiful home somewhere, settle down, have a family, but there is always a part of you that’s itching to get away. Vacations are part of that wanderlust; the chance to get away to someplace beautiful. And then you see it. The local newspaper at your vacation destination, and lo and behold, there is a real estate section right there.  Dare you even look?  You can’t afford it, can you? Do I really want two homes?

A second home can work for you, but you have to go into the process knowing what to expect. If you’re looking to get rich quick, don’t count on it. According to recent data, the price of real estate in many areas that are deemed “Vacation Markets” has risen twice as fast as real estate in other areas. So, not only is a second home at your chosen destination going to cost you a pretty penny, it’s no longer a well-kept secret anymore and the chances of you flipping it to make a quick buck are slim.

The best piece of advice a possible vacation home buyer can heed right now is to buy for love not for money. Many vacation markets have shown that trying to turn a profit now is close to impossible. The bright side to all of this is that there are still bargains to be found in many markets. Those looking to sell in the upcoming months will be doing so at lower prices. Now could be a great time to buy a place that you’re planning to keep for a long time.

How do you know if you are making the right choice?  Take some time and think about it. Evaluate the pluses and minuses of buying another home. Make sure this is the area you want for your vacation home. The final check should be the bottom-line cost of owning two homes.  If the price of owning two homes is more than a third of your total income, you have spent too much.

Buying a home is a big investment for everyone.  Buying a second home is a huge decision so take the time to properly evaluate the pros and cons before you make a final decision.