Increased housing prices aren’t doing anyone a favor, especially if you want a second house, so what should you do?
Investing in real estate is a great way to build wealth, and buying a second can be a start. However, you should know several things if you want to avoid wasting money.
In this guide, you’ll learn all about how to get a second house the right way, even when prices are high. No matter what kind of house you want, we’ve got you covered.
Here are the dos and don’ts of buying a second house!
Do Set a Budget
Buying a second house can provide you with various benefits, but one of the first things you must do is set a budget.
Since you have home-buying experience, you’ll know that setting a budget requires a lot of research. Because of this, start looking around at different neighborhoods to see the kinds of homes available on the market.
The current housing market is a wild one, so expect to see homes valued much more than they should be. Considering house prices continue to rise, you must consider this when putting together a budget.
Don’t Buy Impulsively
When it comes to building a portfolio, you cannot afford to buy without due diligence. Although you may be anxious to get a second house, you must take your time with the process to ensure you get the best one. Buying with haste will only prevent you from seeing everything that’s out there.
Many homes look appealing at face value, but you won’t know how they are until you visit them. If you find a home that interests you, note the contact info of the seller so you can arrange a visit. This should be done when buying any property.
When visiting a property, you can ask any question you’d like to learn as much as you can about it. If a seller can’t seem to provide adequate info about a property, you shouldn’t buy it until you get another opinion from a professional.
Do Hire a Real Estate Agent
We mentioned getting a third opinion from a professional, and that professional can be a real estate agent.
As you’re learning how to get a second house, a real estate agent can provide a ton of information about different locations and types of homes on the market. They’ll also help you determine whether a home is valued properly to prevent you from overspending.
Keep in mind that real estate agents help both buyers and sellers. If you check out local property listings, most of the properties you see are being advertised by realtors. They know how to attract buyers and find the properties buyers want.
Don’t Get the First Mortgage You See
A common mistake that many people make when getting a second property is quickly applying for a mortgage. If you plan to borrow money for your second home, you must know what your options are long before starting the home-buying process.
Applying for a second mortgage should only be done if you’ve paid off your first mortgage. If you haven’t, you should at least earn enough to afford both loans.
Real estate investing is all about due diligence, so start looking for different lenders. Pay attention to the interest rates and see what types of mortgages they have.
Do Consider Renting Out Your Home
Building a portfolio will help you build wealth, but only if you know how to profit from your properties. Fortunately, a simple way to do this is to rent out your second home.
Renting out your home will not only earn you extra money, but the experience will help you manage other properties in the future. However, you don’t need to start renting your property soon after buying it.
If you plan on buying a second property solely to rent it, you should consider this when choosing a location. Some areas see higher demand because of their proximity to other things, so you could charge more. However, you’d end up spending more to get it.
For example, a house in a downtown neighborhood will be close to various businesses, so more people will want it.
Don’t Neglect Comparing Options
The last thing to know about buying a second house is that you shouldn’t neglect comparing options. You must put together a list of various neighborhoods that interest you and research the available properties in them.
If you can’t find a house in a neighborhood you like, consider waiting until one becomes available. This is especially important if you plan on living at the property because you’ll want to avoid getting something you don’t enjoy.
If you’re buying a property to rent, you should think more about what tenants would want. This will expand your options and let you start earning money faster.
Now You’re Ready to Buy a Second House
As you can see, buying a second house can be a profitable venture, especially if you know about the dos and don’ts. Now that you know them, start thinking about what you want in a second house. From there, you can research available properties while using this guide to find one that suits you.
If you struggle to find decent properties, consider hiring a real estate agent. Hiring one as soon as possible will save you a world of stress, and you can continue to work with them as you expand your portfolio.
For more real estate investing advice, check out our other articles.
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