Should you be Thinking of Investing in a Second Home or Not?

Soon the tulips will be sprouting and spring will be in the air, and you will have vacation on the brain! Then begs the question, “To buy or not to buy a vacation home?”

At the end of 2005, according to the National Association of Realtors, the number of second homes reached 3.34 million. So many vacationers love to look at flyers and open houses to dream of that home at the beach or in the mountains. Over the past several years, “baby boomers” really fueled the fire to the second home market. Between 2000 and 2006, many of the top vacation markets rose over 120%. So, when is a good time to buy that second dream home? The easy answer is “now,” but with your eyes wide open!

The first consideration is to buy for the love of it and not necessarily for the investment. Buy because you and your family really enjoy coming to the place you adore and will want to come to for years. That way if the market dips or increases, you can weather the storm. Think enjoyment, not necessarily investment.

The second consideration is to not let the Pina Coladas and the sunsets go to your head! Buy with your eyes wide open. Is this “the place” your family wants to vacation at for the near future and ca you really afford this? Talk to someone at Jenny Pruitt Mortgage Services about the costs of owning a second home. Typically, lenders view second homes as a greater risk and you may pay slightly higher rates. You may also want to talk with someone at Jenny Pruitt Insurance Services about the costs of insuring a second home. Homes near the water are affected by high winds and flooding. Make sure you know the costs of a second home.

In addition, consider the costs of upkeep and association fees you may have to pay for your second home. Pay attention also to the rules and regulations of the association. You don’t want to purchase and realize that there is a “no pet rule” and your four-legged family member has to be left at home!

There is no doubt that a second home is a place where memories can be made and real estate investments have traditionally been the best part of an investment portfolio. But as with any investment, do your homework and consult with your Jenny Pruitt associate to make your second home investment the best it can be.