10 Tips for Buying a Second Home (Part 1)

Buying a Second Home

Buying a property as a Second Home is different in some ways than purchasing a primary home. One obvious difference is you won’t be spending all your time there.  

There are some important considerations before getting too far along in the process. Here’s Part 1, in no particular order:

Life at the beach in your vacation home

LIFESTYLE

Think about the lifestyle you hope to have in your second home. Will it be much the same as in your primary home or will it differ, and if so, how?

Many people live differently when enjoying their second home than in their primary home. That may depend on how long they are there and how often.  For many second home owners that’s exactly why they want a vacation property. It’s a place to enjoy time away from home and routines like cooking, shopping, and work.

Read more about issues to consider in this lifestyle post.

The type and size of the home may be different. Or the condition (e.g., turn-key) may be more important if you don’t want home-owner projects during vacation time.

FINANCIAL

Budget is, of course, an important consideration. As with any house purchase you need to know upfront what you can afford. Are you planning, and able, to pay cash, or do you need a loan?

Mortgages for second homes vs. investment properties may have different rules so check with your lender. You should know your buying power so get pre-approved before starting your search. Once you begin your search you will want to be ready to make a decision, and an offer, when you see the right property. Get prepared with Proof of Funds (POF) or an up-to-date Pre-Approval letter ready to go.

There are other financial issues to keep in mind, too. This includes the obvious costs of an additional home – the mortgage, homeowner’s insurance, HOA fees (if any), maintenance, repairs, furnishings, travel to and from your home, utilities, and property taxes, among others.

LOCATION

Location is often an important consideration for second-home buyers. And this may differ from what was important to you when your purchased your primary home.

Lifestyle certainly is a big part of the equation. Do you want to be at or near the beach? Or do you prefer the mountains or desert, or being in a city? Do you want great weather year-round (“America’s Finest City,” San Diego, offers a wonderful outdoor lifestyle year-round). Or is the change of seasons important. Perhaps being near a ski resort is important.

You should also think about how far away you want your second home to be. Do you prefer a place that is just a couple hours drive so you can use it every weekend? Or is it OK to take a longer drive, or even a flight? Consider how often you plan to use the home and how much time and effort you are willing to spend getting there. And think about how long you plan to be there.

RENTING YOUR SECOND HOME

Some buyers of second homes want to be able to rent their homes when not using them. How about you? There are financial and tax implications of doing this. Thus you should have a conversation with your CPA and understand the issues about rental income and related tax matters.

One key question about renting is to understand if there are restrictions around renting. This could depend on the community the home or condo is in, as well as any restrictions from the city.  Some communities may not allow short term (less than 30 days) rental. In some places you can do vacation rentals, or AirBNB-types of renting. In others the minimum rental period is at least a month.

It’s not unusual for HOA communities to place restrictions on the minimum time for a rental. This is often 30 days, or longer. And some HOAs restrict the number of rentals in the community at a given time.

Of course you want to consider whether you WANT to rent a place you consider your home, and how often. Maybe keeping it purely as a second home IS your preference. Or it might be shared with friends and family members.

MAINTENANCE

Maintenance issues are important to think about when buying a second home. Your ideal lifestyle in your vacation home may be “no maintenance!” Do you want a property that is low maintenance, especially the exterior? Or are you willing to take care of that yourself as needed. Are you willing to pay for others to address maintenance issues when you are not in residence? Or do you simply prefer no DIY?

This might prompt a choice between a condo, where your HOA fees cover exterior maintenance and landscaping, versus a single family detached home.

Any home will require some maintenance and you just have to be prepared for how to handle it.

Look for Part 2 for additional issues to consider in your second home purchase.

I am happy to help you with any questions or concerns you may have about purchasing a second home in Carlsbad or the North San Diego County area, especially along the coast. Please reach out to me at (760) 840-1360 to discuss your specific needs, plans, and budget. I’m happy to answer any questions, plus help you find that perfect second home, whether at the beach or nearby.