Purchasing a “Second Home” as Your First Property
The volatile market, combined with the need for more multi-purpose and spacious homes, has created a new trend among investors and home buyers alike.
Real estate is all about location. It’s no secret that the current economic climate of the past few years has caused major shifts in real estate buying habits. The volatile market, combined with the need for more multi-purpose and spacious homes, has created a new trend among investors and home buyers alike.
Buyers are investing in more remote locations for their homes, rather than heading into big city life. In fact, 64 percent of surveyed real estate professionals this summer stated they have seen a growing trend of buyers purchasing their “second” home first; which involves buying a property in a more off-the-beaten-path location. Buyers are looking for extra square footage, open outdoor space, and the ability to invest in property with more financial perks than big city purchases can offer.
Not only do these more remote locations deliver more space to work, live, and enjoy, but they also on average save buyers an estimated $76,000 on the cost of the home. This makes purchasing a “second” home first more appealing to first-time homebuyers and seasoned investors.
Of the over 900 real estate agents surveyed, a majority still suggest the current real estate climate is favoring sellers. The low supply of homes to purchase is expected to keep sales moving quickly, even though affordability is far from ideal. Purchasing in a more affordable location is a key to making these remote location purchases more popular.
Perks of Investing in Remote Locations
- Easily overcome local real estate market limitations.
- With work-from-home capabilities at an all-time high, live where you want without being tied to your office location.
- Access more profitable markets where economic growth is booming.
Why is Remote Investing Rising in Popularity?
- Investors earn higher yields in other markets.
- High prices in certain markets (think coasts and major cities) can make investing nearly impossible for many.
- Allows investors to diversify their investment portfolio for more financial security.
- Makes investing in real estate more attainable for new investors and buyers.
Pros & Cons
Whether you plan to invest in a “second” home as your first home to live in or as a true investment property, there are pros and cons to consider. One pro includes having the ability to widen your scope of markets to invest in. Another positive to investing in a remote location is allowing for larger profits by purchasing a property with more affordable prices, higher yields, and lower taxes. Purchasing outside your local market also delivers truly passive income.
As for the challenges associated with purchasing a remote home, there are many things to consider. You need to spend time analyzing other real estate markets to ensure you’re making a sound financial decision. If you are planning to rent out the property, you will likely be met with the challenge of finding a trustworthy individual to manage your property and help with maintenance.
If you are trying to decide if investing in a “second” home first is the right choice for you, consider this: Real estate transactions always involve risk to the buyer. Be sure to do your research on the location and learn about the challenges that can come with being a landlord from afar.
Olivia Forgette is a real estate marketing specialist, writer, and homeowner who enjoys using her experience to help buyers and sellers feel informed and confident during their big real estate transactions. When not writing and blogging, you can find her loving on her newborn baby boy, or in the kitchen baking some homemade sweet treats.