Be a smartass when buying a second home...

Here are some tips to help you make a smart decision:

Believe it or not, despite a pandemic and recession, the demand for second homes in the U.S. doubled in 2020. I observe this not only here in the Charleston area near the coastline but also in the Upstate, where we enjoy mountains and waterfalls.

I read that the interest in second homes, mostly vacation homes, outpaced the 50% increase in demand for primary homes.

A second home comes with unique financial considerations. Therefore it is important to have answers to a few serious and important questions:

1. What is the goal? 

   It’s important to decide whether the second home will be used as a vacation home or rental property to generate passive income, maybe both ?! This will affect the search process and money one wants to spend. 

   Let’s say the 2nd home shall just be a vacation home, then quite possibly one is ready to spend a little more money to match a certain lifestyle. If a second home is just there to generate passive income, a buyer should look to spend money wisely, so the income exceeds debt and other expenses.    

2. Where Do I Want to Buy? 

   Very important to decide on the location. Beach, mountains, city? Is it easy to reach if necessary from your current location?  

   This “hot” housing market across the U.S. has led to significant price increases in many places considered desirable for vacation properties.  Some places might be high-demand retirement locations.

   As a local real estate agent, I see increased interest from out-of-State buyers, many wanting a summer vacation home or planning to retire soon.

3. Can You Afford Two Mortgage payments? 

   It is really important not to underestimate the cost of owning a second home. This is especially true if a second home means a second mortgage. You may have money for a down payment but what about maintenance, property taxes and possibly a vacancy if the investment property is not rented out for a month or so? It is very important to have an emergency fund to cover expenses such as insurance, taxes, repairs etc for a few months.

4. Can you keep Up With the Costs of a Second Home? 

   One has to be sure to be able to afford all the things that go along with owning a second home 

   That includes utilities, property taxes, insurance, repairs, and possibly other costs. A common

   rule is to set aside 1 - 3% of the home’s purchase price for annual maintenance and repairs.

5. Do you have an Exit Plan, just in case? 

   Maybe you want to own this 2nd home forever, maybe just for a few years? Can it be sold easily? Is it a desirable property and location? Consider the obstacles life can bring and be

   prepared for worst-case scenarios. In general, people default more likely on their second home and so it is important to be in a good financial position before making the decision to purchase a second home.

Looking for vacation homes or investment property? Here are some examples: https://www.flexmls.com/share/4IS91/Selected

I can assist you in finding the right one.  And my agency can assist you in managing it. Contact me for info at my website: Ute Appleby: or email me: uappleby@agentownedrealty.com