Buying a second home can be a savvy investment, but it can also get you into financial trouble if your ambition outstrips your budget.
Forbes describes some considerations to make before you decide to buy a second home to determine whether it is a good decision for you at this time.
1. What you want to do with the property
Before buying a second home, the most important thing to consider is what your goals for the property are. In other words, do you want to use it as a vacation home, or use it to generate income? Having clearly defined goals for your property allows you to make a detailed plan by which you can achieve them.
2. Where the property is
An old saying holds that location is one of the most, if not the most important consideration when considering a real estate purchase. The same holds true for a second home. However, the desirability of the location depends partly on your goals for the property, so it is important to determine these before scoping locations.
3. Whether you can liquidate the property quickly if needed
In the event of an economic downturn, you may have to sell your property quickly. Therefore, you should consider whether your second home is likely to sell quickly even if the real estate market tanks. A good location can help in this regard, as can unique, desirable features.
Another strategy for making sure you can sell your property quickly if necessary is to find the best neighborhood and then purchase the property with the lowest sale price.