In purchasing a home, buyers tend to focus a bit too much on the price of a home and do not consider enough the monthly payment. As a buyer, you must be concerned not about price but instead
6 Questions To Ask Before Buying A Second Home In Palm Springs Area
Buyers from Los Angeles, San Diego, Orange County, or Canadians, out-of-state Americans purchase a vacation home in Palm Springs Area to use for a family retreat. Some plans to convert their vacation home into their primary residence in the future for retirement. Some buys a second home so they can take their dogs. If you’re looking to buy a second home, our checklist gives you questions to ask yourself so that you have better understanding of what goes into owning and maintaining a second home.
1. How much will a second home cost?
Besides sale price, you should factor in mortgage, property taxes, insurance, utilities and maintenance fees-and some of those expenses are probably higher than you think-plus up to 1.25 percent of the purchase price to cover annual maintenance and unexpected repairs. You'll also need to budget 20 percent more for insurance than you pay for your primary residence; if you rent out your second home, you'll also need the liability coverage.
2. Can you truly afford a second home?
You should only buy a second home after the rest of your finances are in tip-top shape. All of your mortgage payments-including the second home and remaining debt should consume no more than 36 percent of your monthly gross income. If you can't make those numbers work, see question No. 3 and No. 4.
3. How do you plan to use the home?
If you're buying a second home for your own personal use, purchase one you love. But if you're counting on rental income to cover the mortgage, be more conscious of the home's location and appeal to renters. Also remember that different tax rules apply according to whether your second home is for personal use or if you rent it. Given the complexity of tax considerations and reporting rental income, it's a good idea to consult with a tax professional before you decide to buy.
4. If you rent the home, is it the right property?
First, think about how often you'll want to rent, plus how long the potential rental season will be, then calculate how much you can make per year. Is it enough to cover the mortgage, taxes, insurance and marketing for the property you're considering? While you're vacation-home shopping, take a look at similar properties in your area to see how active the rental market is, how other places are priced on a nightly or weekly basis, and how attractive your home will be to potential renters. Make sure it will stand out!
5. Where will you buy?
Make a list of pros and cons, then compare them. Ask locals who live there and others who have vacation homes what they love and don’t love so much about it. This should help you narrow down the location so you’re sure it’s perfect for you. Gated communities and neighborhoods with good reputations for safety are a plus.
6. Who is going to be in your Network?
Many people start out thinking they're going to do all the work themselves- finding a right home, advertising and finding tenants, cleaning, handling contracts and deposits, and regular maintenance and repairs. However no one ever succeed by himself or herself. There is a group of people working behind the scenes who support his or her success. They are the Network. Your Network is composed of specialized independent contractors, freelancers and mentors. They are the Real Estate Agents, lenders, accountants, inspectors, painters, landscapers, property manager and the other you may need depending on the situation. Make sure you put your Network together ahead of time!
If your goal is to own a vacation property, then now may be one of the good times to buy a second home because mortgage rates are still quite low and prices of homes may continue to rise.
Are you interested in buying second home in Palm Springs area? Contact me at 760-636-9580. When you choose me as your partner, you are not just getting a trusted, respected agent – you are getting a local expert who is passionate about serving our community and those who call it home.
John relocated from Atlanta, GA, to the Inland Empire during the fall of 2012. He immediately discovered the beauty of the Coachella Valley and knew this is where he wanted to be. A resident of Cathed....
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