Tips on Buying a Second Home

One house, two house, three house, four. Some people collect houses like others collect stamps. But, most of us are content with only owning one house. Occasionally, though, we might get the urge to double our residences. When this happens, it's important to know a few tips before you sign on the dotted line.

Know how much time you'll spend there: Before buying a second home, you need to decide if it is a place you will visit frequently - heading out nearly every weekend for a getaway - or if it's a place you will see once, twice, maybe three times a year. This decision is the cornerstone of other decisions you will make. If you are going to be spending a lot of time at your second home, you might want different things than if your second home is a place you will only visit about as often as you visit the dentist.

Know your second home's maintenance levels: Ah, the high maintenance home: a house that leaks, creaks, and causes you to spend hundreds of dollars in repairs. No one likes a high maintenance home, let alone a high maintenance second home. Before purchasing your second home, thoroughly inspect it and ask to see photos of it for the various times a year. Your second home might look glamorous in the winter, but once the snow melts you might realize the roof needs repair and the lawn hasn't been cared for since the turn of the century....the 19th century.

Know it's rent-ability: Your second home might be just that: YOUR second home. The idea of strangers renting it out might be as appealing as using a communal tooth brush. But, then again, you might be purchasing a second home merely so you can rent it out. If you are using a second home as a business venture, then make sure it is a place that appeals to the masses. If it's extremely personalized, in an obscure location, or not well taken care of, it's not going to be a place many people will want to rent.

Know your tax laws: The tax laws of a second home greatly vary depending on whether you use it as just a place for you and your family or you use it as a way to pad your bank account,. For instance, if you do the former, interest on the mortgage is tax deductible, but if you do the latter, you can deduct rental expenses. Knowing the difference in tax laws can help you keep your money out of the pocket of the IRS.

Know the investment worth: A time may come when you decide a second home is one too many. When this occurs, you'll likely need to put your second house on the market. A second home that appreciates and leaves you with a 50,000 dollar profit will be a much nicer surprise than a house that - in ten or twenty years - will be looked at as so 2008.