Most people tend to look at buying a second home as a luxury purchase, usually with the purpose of being a vacation getaway. However, second homes can be very valuable beyond vacationing. Buying a second home can potentially be an excellent investment over time.
Purchasing a second home can be a valuable investment as the property can gain home equity if its value increases over time. It is typical for a property to naturally become more valuable like this, especially if it is in a desired vacation destination. Making small but steady improvements to the home over the years is another easy way to contribute to increased value.
Beyond potential growth of equity, renting the property out to guests can also serve as a significant source of income. If you are renting the home our enough weeks a year, it could even pay for itself. Another key financial benefit is that homeowners with more than one property can be eligible for some tax breaks including property tax deduction, mortgage interest reduction, and home equity loan interest deduction.
Important things to consider
Any investment requires a thorough investment, and purchasing a second home is certainly no different. Before committing to a second home investment, you should first consider how often you plan to use and rent out the property. You also need to ensure you have the financial resources to take on a second mortgage, as well as the time to manage upkeep and maintenance of the property. Managing upkeep and maintenance can be particularly important, as these factors can impact the value of your second home over time. As long as you feel comfortable about the finances and management responsibility, you should feel comfortable about the possibility of a second home investment.
How co-ownership can make this investment more accessible
While purchasing a second home can be a great investment, it could still be difficult to attain for some people as it can be a big financial and time commitment. Co-ownership can be the perfect solution to this. Co-owning your second home splits the cost between four or more owners and gives you teammates to help manage the home. It also minimizes any financial risks associated with ownership.
Owning a second home isn’t for everyone. Some people simply don’t have the time or resources to do so, and that’s ok. However, co-ownership can make the investment of a second home possible and accessible to anyone.