With interest rates still historically low, many Orange County residents have been thinking about investing in a second home because of the obvious tax benefits, and the potential rental income that can come with owning a second home.
Before making the decision to invest in a second home, here are some important tips that every homeowner should consider before making that important decision.
It Must Make Sense Financially
Investing in a second home can be very exciting for anyone but, before taking on the commitment of a second mortgage and the responsibility of owning a second home, this investment must make sense fiscally.
For example: a homeowner must look at all of the costs that come with owning a home like property taxes, Home Owners Association dues, homeowners insurance and the cost of hiring a property management company (if it’s an investment property), unless the homeowner wants to interact with the renters themselves.
Where Is The Home Located?
If the goal of the second home is to rent it out, the homeowner should first think about location, especially in Orange County. Certain areas, like Irvine and Newport Beach, are more desirable and thus will be easier to rent. However, you should also consider the potential return on investment since a more expensive property will cut into your monthly cash flow.
Contact us to see which areas will be best for your overall investment strategy and will provide the best cash-flow.
Will It Pay Off Long Term?
Buying a second home may make sense for a homeowner when they are younger but will it make sense in 10 or 20 years?
If a homeowner isn’t prepared to hang onto that home for 10, 20 or even 30 years they shouldn’t make the investment. Real Estate provides the best returns over long periods of time in order to take advantage of increased property values combined with increased rental rates.
To learn more tips about buying a second Orange County home, contact the experienced team of Orange County real estate agents at Fred Sed & Associates today by calling (949) 272-0125.