As a small business owner or real estate investor, you may already have one residential property that you use as a mortgage investment. Owning more than one property can be a smart financial move, but it can also be challenging to manage.
Buying a second residential property is not a bad idea. It can be a great investment, provided you research and choose the right property. Here are some things to consider when buying second residential home:
1. Location Matters
If your new house is close enough that you can walk or bike there, location is less important than if it’s too far away.
Suppose you live in a neighborhood with good schools and amenities. The price of your next home may matter as much.
However, if the schools aren’t great or the amenities aren’t available nearby, then the distance from those amenities will become an issue to both you and any renters who might rent from you.
Think about what kind of neighborhood you want to live in, how far it is from work or other activities like family and friends, and what types of schools your children will attend.
If you want to live near attractions like museums or parks, check out their schedules before buying a house there.
Also read: Private: Can a Business Buy a Residential Property in the UK?
First, you must consider whether your family needs an additional house. Do you have children? What’s their age? How many bedrooms do you need?
How many bathrooms do you need? Is there enough space for a garden? The answer depends on how many people live in your family and how much money they earn.
If everyone in your family lives in one house, it’s easy for everyone to use the same bathroom, kitchen, etc., but if there is more than one bedroom, then each person will need his bedroom. If there is more than one bathroom it is also very common in big families.
The square footage of each bedroom should be roughly the same as that of the master bedroom. That will make moving in and out easier for family members or guests who come over from time to time.
While no two homes are exactly alike, most new homes have two bathrooms, with at least one being an ensuite bathroom.
Also read: Can You Remortgage To Buy Another Property?
The condition of your second property is the most important factor you must consider when buying a second residential property. A property that has been vacant or used as a rental property will not be as valuable as one that has been lived in and maintained well.
If you are planning to buy a second residential property, make sure that it is in good condition, and not only that but also ensure that professionals have thoroughly inspected it. Such will help you determine whether or not it is worth investing money in purchasing this real estate.
Check out the condition of the home’s exterior before you buy it. Is there mold on the walls? Is there evidence of water damage? Are there cracks in the foundation?
Also read: What Are Searches When Buying a Property?
One of the most important things you need to do when buying a second home is to ensure the price is right. It might seem obvious, but many people get caught up in the excitement of owning their dream home and forget that it is still just one house, not an investment.
Additionally, if you are looking at properties in areas that are less expensive than where you live, be sure to factor in any potential rental income you will receive from those homes too.
Also read: When Do I have to Pay Conveyancing Fees?
5. Get-approved for a Loan
First, determine the basics. The first step is determining how much money you need for the down payment and closing costs. You will want to ensure that the property has reasonable pricing, concerning comparable properties in your area.
You should also consider the rent you want to cover each month and any maintenance or utility bills that may be required during the property’s year-round occupancy.
Once you’ve determined these numbers, find a lender who will work with you — not against you — and get preapproved for a loan.
More importantly, it means that they will have your financial records and information before they even look at your application and can give you an estimate of what their loan requirements might focus on this information alone.
You should also consider getting preapproved for a loan or mortgage with different lenders so that there’s no risk involved if something goes wrong with one of them or if they don’t approve your application.
Also read: The Cost of Buying a House and Moving
If you are thinking about buying a second home to grow wealth, alleviate that housing shortage, or enjoy greater financial freedom, there is no time like the present to get started.
A large part of the battle is simply coming up with the cash for a down payment—but once you’ve done that, it’s time to find more information on how to buy real estate in your area.