Buying a second home is a great way to lock in a great vacation spot and earn some extra rental income. However, there are also some financial realities that many homeowners aren’t aware of before they purchase their second home.
If you rent your second home more than fourteen days a year, the IRS qualifies that home as a rental/investment property. As such, the income you gain from your home is taxable. Your second home also won’t qualify for the same deductions as your primary home.
Risk & Liability
It’s easy to overlook problems like leaks and water damage in a home that goes unoccupied for long periods of time. Empty homes are also more likely targets for vandalism. Hiring a property management company to keep an eye on the home can help ensure you catch potential problems before they get out of hand.
Expenses such as home insurance, security monitoring fees, and running utilities can add up in your second home. On top of these costs, you have annual maintenance costs and repairs that will inevitably pop up over the years.
Understanding the expenses involved with owning a second home is an important part of purchasing your next home! That way, you can make a plan. Vacation rental services like Airbnb make it easy to cover the costs of owning a second home or even profiting from it. You can also use remote monitoring technology, such as video doorbells, access control systems, and environmental monitoring to minimize the risk of missing important developments while away from your home.
Buying a second home is a great investment, but one that you need to be well informed about before you commit yourself. For more information about buying a second home or an investment property, give me a call!
House flipping activity surged to an 11-year high this year, with more than 207,000 homes flipped, according to ATTOM Data Solutions, a real estate data firm. But the key is knowing where to be and when. “The sweet spot for successful home flipping is finding the neighborhoods just emerging as the next hot neighborhoods in a city,” says Daren Blomquist, a senior vice president at ATTOM Data Solutions. The firm says the average profit for a housing flip in 2017 was $68,100.
Realtor.com® ranked the 200 largest metros according to the share of all home sales categorized as a flip (defined as any type of home that is bought and resold within a three- to 12-month period). Researchers limited their rankings to two metros per state for geographic diversity and only included markets where the average profit was at least $30,000.
Read about the best housing markets for home flippers, according to realtor.com®.
Americans ranked real estate as the best long-term investment, even over stocks and gold, according to a recent Gallup Poll of about 1,000 U.S. adults. Real estate has been the top investment choice for the past two years, and it’s lead is increasing over four other popular investment choices.
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For the second straight year, more Americans name real estate than stocks, gold, savings accounts/CDs or bonds as the best long-term investment. Real estate leads with 31% of Americans choosing it, followed by stocks/mutual funds, at 25%. Meanwhile, gold dropped to third this year, a significant change from 2011 and 2012, when it was the runaway leader.
The percentages of Americans choosing real estate and stocks are steady this year compared with 2014. This follows three years, from 2011 to 2014, of increasing partiality toward both investments as the housing and stock markets recovered and gold’s appeal waned. The public’s preference for gold fell five percentage points in the past year, bringing its overall decline since 2011 to 15 points, the largest shift seen among the five investments tracked.
Typical investor magnets like San Francisco, New York City, Boston, and Seattle are getting new competition from some rapidly growing markets. The coastal cities are no longer the top choices for investors: Other markets are stepping in as the ones to watch for 2015, according to Emerging Trends in Real Estate 2015, a report co-published by PwC US and the Urban Land Institute. The report is based on a survey of more than 1,000 leading real estate experts, including investors, fund managers, developers, property companies, lenders, brokers, advisers, and consultants.
Houston and Austin edged out San Francisco for the top spots this year, proving to be the top picks for real estate prospects in 2015. Charlotte, N.C., nabbed a seventh place spot on the ranking list, edging out Seattle and Boston; while Nashville, ranked No. 14, topped Manhattan.
According to a recent Gallup poll, more Americans are beginning to view real estate as a viable long-term investment. Thirty percent of those surveyed early last month took this view, up from 25% just a year ago. Gallup credited an improving housing market as being the chief driver of the change in popular opinion on this matter.
But, wait. Some experts, notably Yale economics professor Robert Shiller, disagree heartily with this view. In interviews over the past couple of years, Shiller referred to his research in which he studied home price appreciation from 1890 to 1990. He found that, considering costs of construction and inflation, homes really didn’t appreciate in value at all.
Does that mean that buying a home is a lousy move? Not at all, and here’s why…
Millionaires across the U.S. say commercial and residential real estate is the best alternative-asset investment option for 2014.
One-third of millionaires surveyed in a new Morgan Stanley study plan to purchase real estate this year, Bloomberg reports. And 23 percent say they’ll invest in real estate investment trusts.