Buying a second home has become increasingly popular in recent years, and there is more than one reason for this. For one thing a second home is a place to live, go on vacation, or retire; for another, it can be a great investment and, by renting it out, a new income stream that could even end up paying for itself. Hot Springs Village Houses, an agency dealing in real estate for sale in Hot Springs, Arizona, say that renting out a second home is just as popular a decision as using it yourself – and most people actually do both.
However, sometimes the second home investment is approached a little differently. Although most people buy a second home as a secondary residence, many also do it with the intention of living in it and making the old home a second residence – or a form of rent income. This is more popular than you would think, and it combines the need for a new place with the desire to earn money from letting.
Is It Always Feasible?
Of course, one of the things you will need to deal with is that sometimes this plan might not be feasible. Just as purchasing a second home to rent out as a holiday home depends very much on whether it is suitable to be a holiday home, so too must those who wish to rent out their old home ensure that this home is one which people would care to rent and live in.
It is hard to work out which situation is easier. Those renting a new home have the opportunity to choose it, unlike those renting their old home. But on the other hand, that old home doesn’t need to appeal specifically to vacationers or those looking for a second residence.
In any case, if you are hoping to rent the old place, then you need to make sure that is feasible and that you already have a desirable property on your hands. You cannot change it.
Becoming a Landlord
Another particularly important consideration you will have to make is the move from simply being a homeowner to being a landlord – and that is a whole other ball game. You will need to deal with tenant contract law, you will need to learn how to manage a property (and tenants) remotely, and you will need to investigate the new taxes that are applicable to your income. This applies to anyone becoming a landlord for any reason, and it certainly applies here.
Check Your Current Home’s Mortgage Loan
Another thing you should be sure to do is to check whether you can actually legally rent your home or if you will be able to in the future. To find this out, you need to have a look at your current mortgage loan agreement. Very often, it will stipulate that you need to live in the house for a set amount of time – usually ten months – before you can legally rent it out. However, there is leeway here, especially if you will not actually be renting it for some time.
Work Out Your Finances
With two properties, you will typically pay higher mortgage rates and be obliged to pay more for down payments. Nevertheless, you will be in a strong position, potentially, for being granted helpful loans. This might be a necessity if the plan is going to come off at all.
If you pull it off though, there’s no denying that moving to a new vacation home and making money off the old place will land you in a very sweet position indeed.