Deciding if a Second Home is Right for You

Living in a fast-paced city because it’s near work but yearning for open spaces, peaceful quiet, and perhaps spend some time boating? A weekend vacation home where you can retreat and relax could be the answer.

Or perhaps residing near nature is more your style but you also have an appreciation for fine dining and weekends enjoying all in the city has to offer? Owning a condo within walking distance of your favorite places could be a perfect second home choice.

Owning a second home can fulfill one of your personal goals and become a dream come true. According to Bankrate, 79% of Americans consider homeownership an indicator of attaining the American dream. It’s estimated that between 6-10% of homes across the United States are second homes.

Second homes (also known as vacation homes) are defined as a personal property the homeowner intends to live in for at least part of the year or visit on a regular basis. These types of homes are frequently within 50-100 miles of someone’s primary home. These types of properties are different than rentals or investment properties where the purpose is tied to earning revenue.

Advantages vs. Disadvantages of Second Homes

Part of the decision in choosing to own a second home comes with being aware of the advantages and disadvantages. This vital information will aid you in making an informed decision and carry topics to discuss with your experienced tax specialist and also your lender. Let’s dive in and explore the facts.

Advantages

Vacation Home: Having a second home could shift you closer to family, to work, or simply become a relaxing get-away. It’s a prime place to recharge and enjoy a different pace.

Future Retirement Home: With a look ahead, this home could become your ideal retirement home. Whether it’s one-level living, smart technology enhancements, wider doorways, or anything else you’d love to have in your retirement home, this second home could have it all and in a manageable size that makes sense for your golden years.  

Home Appreciation Potential: In general, a well-maintained and cared for home has the potential to appreciate in value. Years from now, should you make the decision to sell, the property values may have increased to yield a respectable profit.

Tax Benefits Potential: If owning a second home puts you over the $1 million debt threshold, you may be eligible to write-off the loan payments interest. Be sure to consult with your tax preparer to discuss the specifics for your situation and ask about additional tax benefits available to you.
Potential Vacation Rental Income: This second home    

This second home has the potential to generate some extra income as a seasonal or weekend rental. This is especially attractive if the home is near tourist attractions, colleges or universities, or at a location that is appealing to renters.

Disadvantages

Higher Home Mortgage: Oftentimes the mortgage on a second home is obtained at a higher rate with higher interest percentages. Lenders understand that during a financial crisis, a second home runs a higher risk of default on a loan so the primary home can be preserved.

Two of Everything: You will suddenly have double in areas of:

• Home mortgages
• Homeowner’s insurance
• Fuel bills
• Utility bills
• Water bills
• Property tax bills
• Home maintenance and upkeep
• Home furnishings

Affordability: Having two homes can become a challenge for a homeowner to afford. If the timing of this ownership matches when you’re paying college tuition for your children or funding your retirement plan, it could spread your available funds too thin.

When you’re ready to begin looking for a second home, let’s talk. I’ll help you consider all of your options plus work within your budget.  

Since 2004 Sara Lyn Nguyen continues to bring a wealth of knowledge and expertise about buying and selling real estate around the Houston area to those she serves. Sara is a multi-year award winning REALTOR® and relocation specialist where her clients trust her to have up-to-date information on the real estate market. She has been one of Gary Greene’s Multi-Million Dollar Top Producers, and citywide was the #2 Top Producing agent in 2020, #3 in 2021, and #2 in 2022. When it’s time to buy, sell, invest, or relocate speak with a trusted professional knowledgeable in the homes and neighborhoods of Fort Bend/Sugar Land and the surrounding region.