Buying a Second Home? Consider These 5 Factors First

#1: Location

(Location, location, location)

Before you begin your search, you need to take your lifestyle into consideration. In other words, you should think about the comforts you enjoy on a daily basis. If you’re living in an urban environment, opt for a rustic cabin in the forest. If you’re used to working in a large city, maybe a small vacation home on or near the beach will work better for you.

As you narrow down the best areas to purchase your second home, it’s critical that you don’t neglect the local market. What you want and what the locals want are probably two very different things. Thus research the housing market in the area where you want to buy. Learn about local prices and determine how well they’ve held up during the past few years, and see how the local economy fares. The better you know the local market, the happier you’ll be with your purchase.

#2: Costs

Home purchases are typically much larger investments than rentals, so keep in mind that depending on your financing options and your desired offer, closing costs and due-on-sale fees for a home purchase can easily run you another 5% to 10% of the purchase price. Since sellers often mention the closing costs in the listing, you can estimate that figure before making an offer.

#3: The Mortgage

Mortgage rates are in their historic low, ranging between 4.25 and 4.75, but they can rise again in the near future. You should try to strike while the iron is hot and get the best interest rates possible.

Factor in the cost of the mortgage in your budget. Additionally, make sure that you know all the other monthly costs that come with owning a second home. For instance, you should factor in insurance, maintenance, taxes, and utilities such as gas, electricity, and water.

Get pre-approved for a mortgage even before you start looking for a property.

Choose a segment in which the population is increasing. It will ensure that your property values will most likely go up as well.

Look for a property that is in a desirable location but still has the potential to appreciate in value and a buyer.

#4: Lifestyle

Buying a second home is a big decision, especially if you’re facing the reality of purchasing a vacation getaway. There are numerous factors that you’ll need to consider to ensure that the purchase will be beneficial for your current lifestyle and goals. Although there are plenty of places that are romanticized, you’ll need to do your due diligence before you buy, particularly, if you’re thinking about investing in a second property.

Do you have the number of years on your current house?

The first thing that you will want to do is determine how many years you need to stay before you can sell. This is important because it will affect your budget. Budgets, as we all know, are flexible. That being said, you’ll need to consider how flexible the budget will be based on the timeline you’ve laid out. Buying a second home is a huge purchase. Like we mentioned, it’s a decision that you need to look into seriously. One way to make sure that you’re making the best decision is to find out which bank you want to work with.

How much is a second home?

#5: Rental Income Potential

Now that you have purchased a second home, you are probably looking forward to the date when the home can start paying for itself. And although residential real estate is an investment, you do not need to be the owner of the property to get some return on your investment. Let’s say you have purchased a second home in the hopes that you can rent it out in the future.

Is There an Alternative?

Amazon's own marketplace allows sellers to reach a wider audience. They can offer their products on Amazon's platform. This is an interesting option for people who make healthy or organic snacks or products. Snack sellers who use this model will distribute their products to Amazon and also receive payments through Amazon. This means that sellers don't need to worry about inventory management on their end.

If you're more interested in a retail space, for example, some large grocery stores have a store brand that they can sell to you on the spot. Kroger has Simple Truth Organic brand snacks and products, for example.

Are you looking for a space to sell your goods?

Health food stores are another good option. The competition here is more intense, as there are already established brands that are worked into customers' shopping routines. People know which stores sell the brands they know and love.

But you can also try small, privately owned stores that aren't yet geared toward natural health foods and organic products. Check out a business directory for locations near you.

Finally, you can sell to other niche sellers. For example, if you make vegan cheese, there are quite a few vegan cafes that sell cheese in their shops. They can also sell it if you ship them a selection.

If you want to be in charge of your own sales efforts and you've got the marketing chops, you may be able to sell through your own website.

Conclusion

When buying a second home, it may be tempting to go looking for the best deal while ignoring other factors. But that kind of home buying is a mistake … often a BIG mistake.

After all, your second home isn’t just a source of enjoyment. It’s also one of your biggest investments … a long-term investment.

And while you may be tempted to go out and find the cheapest place possible, you’ll want to consider five important factors:

Cost. Location. Condition. Price. Potential for Return or Resale

Unless you’re looking to trade down or you’re looking for a make-and-model or when the one you have right now is perfect just the way it is, there’s no reason to consider buying the cheapest one around. Rather, you want to focus on these five factors.

After all, if you’re serious about buying a second home, you want to make sure you’re investing in something you’re going to enjoy for years to come … not throw away.