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Ups and downs of second home ownership

April 17, 2016

finance, lifestyle

 

It could be that you’ve found a lovely little place by the sea in your favourite holiday town, or that you want to invest in somewhere that will make you some money in rent.

Whatever your reasons, getting a second home can be as exciting as it is frustrating.
Before you decide to go down that route, here are some factors to consider before making a decision on getting a second home.

I’ve got my mind set on you

If you’re looking to get a second home as a holiday home for yourself and your family, then chances are that you already have a place in mind. Having a second home in an area where you normally go on holiday will take away all the stress of having to book hotels or worrying about going during the peak seasons. A second home is also likely to have extra space for relatives or friends to visit you as well.

However, going somewhere on holiday and living there (even temporarily) are different things. Having a second home means that you’ll be stuck in a fixed place for most of your holidays, so make sure that you choose an area that you know well and are unlikely to lose affection for over time. It would be a shame to get your holiday home and after a few years decide that you don’t like the area.

If there’s a possibility of you renting out your second home to someone else, consider the fact that they are unlikely to have the same tastes as you. Think about proximity to local amenities and locational features such as parkland or a lake to enhance the appeal of the new house to prospective tenants.

Money

Owning one house is one of the most expensive things that you can do, so owning a second home will also feature somewhere near the top of that list. In addition to the extra expenses involved such as utilities, second home insurance and maintenance costs, you could end up paying out more than you expected if you rent your home out to bad tenants.

On the other hand, the extra income that you get from renting out your second home while you’re not there could help to pay for its mortgage, or it can be used to pay for maintenance costs on the house.

If you do decide to rent out your property, make sure that you have the right level of landlord insurance to cover yourself against any unpaid rent or any damage to the building itself.

Time

If you’re thinking of getting a second home purely as a means to lower your holiday costs, then think again. How often do you holiday to this area? The chances are that the costs of getting a second home far exceed any savings that you would make. Unless you’re looking for some sort of investment from the property, or have the disposable income to buy a second home without thinking, then you may want to reconsider your options. Give yourself a cooling off period before you enter into any decisions so you can weight up the pros and cons of getting a second home.

Are you thinking of buying a second home, or maybe you already have? Was it a good investment? Tell us about it in the comments below.
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