Who doesn't fantasize about owning a second or summer home? Perhaps it is your dream to own a cabin in the woods where you can fish during the summer months. Maybe you want a home at the beach so that your family can spend the summer catching waves and enjoy the boardwalk in the spring and fall. Or maybe, you are an avid skier and want a winter home where you have easy access to the mountains. Whatever your dream, you may be able to achieve it by leveraging the equity in your primary residence to finance your vacation home.
First, here are some things to consider when looking for a second property:
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The market is pretty well saturated right now, with many people in over their heads and looking to get out from under their debt as quickly as possible. It is, with cabins, lake houses, and shore houses, as much a buyer's market as it is with traditional residences. Take your time and shop around for what you really want. Chances are, there is something out there that will meet your needs and your desires, if you put in some effort to find it. Expect to pay less than the seller's asking price, as well. Sellers in dire straights will be willing to negotiate.
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Don't write off fixer-uppers. Even if you are not a handy person yourself, labor is relatively cheap right now, and you may be able to get a great deal on a home in need of repair, allowing you to customize it to your own personal specifications. This can be a great way to save money on a second home, and to get one that will quickly wind up being exactly what you want!
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Make it an investment. Even if you are planning to use your second home as a vacation property, you can also make it an investment by renting it out when you are not going to be using it yourself. Many people who cannot afford the expense of a second home love vacationing by the sea, in the woods, or at a lake. For instance, a home by the shore or a winter cabin could easily pay for the month's mortgage even if you only rent it out for one week and enjoy it with your family the rest of the time.
When you purchase a vacation or other second property, you are doing what is known as leveraging your equity. This allows you to make and save money in two different ways. For one thing, you are making money when you lease out the new home, cabin, or condo. The value for a nice rental at the beach, for a week or a month in the summer, is great. These types of rentals are in high demand, and they can be arranged so that you and your loved ones still have plenty of time to enjoy the house as well.
You will also be saving money on your own vacations, if you decide to stay at your second home instead of paying for hotel accommodations. If you have already found a place you love to be, buying property there can allow you to spend time there as often as you would like.
Eventually, when property values climb again, your second home will pay off in a third way. You can count on making a tidy profit when you are ready to sell!
