Are You Ready for a Second Home?
So you’ve figured the whole homeownership thing out. You know what to look for, what questions to ask, how to get the best deal possible. After a few years spent relaxing in your home base, you’re considering getting a second home. Whether your aspirations are business or pleasure, let’s explore the benefits and pitfalls of having a second abode.
If you love to ski, golf, or simply relax on a beach, owning a vacation home can be a great way to simplify your vacations and eventually reduce cost. Having a vacation home also comes with the added benefit of increased equity, having a place for your kids and friends to assemble, and enjoying the tax breaks that come with home ownership.
On the other hand, maybe you’re looking at using your second home as a rental property and becoming a landlord. This has a multitude of benefits, additional income being one of them: you will likely be able to pay for your mortgage and gain some extra cash (this is especially advantageous if you own the property outright). Landlords enjoy a good number of tax benefits, and have the option of simply moving into the property if their situation changes.
However, being a landlord has its pitfalls and potential homeowners should not take this opportunity lightly. The phrase “passive income” to describe renting out a second property is somewhat misleading, as landlords must do the work of listing the property, vetting potential renters, handling all maintenance requests and emergencies, and may find themselves wrapped up in a legal battle with a delinquent or unruly tenant. Thus, those considering buying a second home should fully weigh the pros and cons before making this big investment.