Your Needs and Long-Term Goals:
- Think hard about what you want before you jump in. There are many different styles of homes in Central Florida but you need to consider why you want to buy a second home so you pick what works best for your situation.
- Where would you like to invest in a second home? There are many areas in the US where you can invest in real estate. However, with Orlando’s booming tourism sector, a quickly growing metro, and low home prices, we believe Orlando is the best place for investment property in the USA.
- Decide how involved you’ll be. Second homes require basically the same work and upkeep as your primary home. If you live far away, you’ll have to consider how you’ll manage regular upkeep, lawn, and maintenance issues.
- Consider how will you use the property. There are a few types of investment options for second homes. You will need to decide if you want to use the property as a vacation home with possible short-term rentals, left empty when you aren’t there, or an investment property with long-term rentals tenants.
The Finances of Owning a Second Home
- Know what you can afford and make a budget before you start your research. Not only will you have a second mortgage, but there will also be property taxes and HOA fees that you will need to pay. If you want to rent out your home, there will be additional taxes and fees you will need to pay too.
- New Construction or Fixer-Upper? An older home can feel like a great deal. However, it could cost a lot of time, money, and effort. Plus, that maintenance could be costly when you don’t live nearby to work on it yourself.
- Shop around mortgage rates. The market rates can change quickly so make sure you get a current quote before you make an offer.
- Check the details on mortgage requirements. If you’re an international investor, make sure to check the minimum down payment, and, additionally, what countries that bank offers mortgages to. Each bank has its own requirements for second home buyers, especially international ones.
- Ensure you’re prepared for Florida weather. Hurricanes give added risks and some areas might be harder to insure than others, like homes that are in flood zones. Plus, homes near water usually means higher premiums too. Be prepared that you might have to pay more. Speak with your insurance agent about policies to get an idea of rates.
- Look into Property Management Companies. If you live outside of the area and want to rent your home, you might need to consider the additional cost of a management company to handle the details.
Location, Location, Location
- Explore the area. Orlando has a large metro area and many distinct communities. Become familiar with the area so you know where you want to buy based on your needs. Better yet, come stay in a home from our sister company Casa Floridian and explore Orlando for yourself.
- Choose a local real estate agent who understands the market and can guide you. If you want a vacation home in the attractions area of town, consider an agent that specializes in vacation real estate like us at Viva Orlando.
- Consider how long of a drive your home might be from different theme parks. If you want to rent your home to short-term renters interested in visiting the attractions area, you won’t want a home that is more than 15 miles from the Walt Disney World area.
- Amenities can add a lot of value. Newer home communities might have more amenities than the older ones and can make them more attractive to potential short-term renters. Additional amenities can help you market your home on the rental market. Plus, they add value to the property if you ever want to sell the home.
- Don’t fall for a home too quickly. While the actual home might be great, the location or neighborhood might not be as good as you think it is. Remain open minded and flexible when searching for your second home.
- Rent out your home when you don’t use it. Orlando is the top tourist destination in the world for families and increasingly they’re choosing vacation rental homes over hotels. Renting your home on the short-term rental market could help you offset your mortgage and you could even make a profit.
- Determine if you will receive any tax benefits. Remember, if you rent out your second home, you’ll have to report the income you make from the sale. However, you can write off expenses like maintenance and cleaning fees as business expenses if you do.
- Have an exit strategy. With your second home, decide as early as possible what you will do once you’re gone. If you want to keep it in the family, make sure it is clear preferably through a will.
- Consider selling your home. It might be hard to think about selling a home before it’s even bought. However, doing so will help you determine if you’ve made the right investment for yourself.