Buying a Second Home in Chatham-Kent
With market and interest rates at an unprecedented low, now is the time to invest in Chatham, Ontario real estate. Though there are mainly first-time homebuyers in the market, it is still great for experienced buyers. While owning a home is always a huge decision, and an even larger responsibility, it is exaggerated when buying a second home. This article can provide you with a bit more knowledge so you can enter this responsibility wisely.
Leverage
When a larger asset is manipulated by a lesser portion of your money, this is leverage. Second homes provide more leverage than the initial home. The more your property value increases, the better the financial return from your down payment if you have plenty of leverage. Discuss this with a Chatham realtor today! A realtor will allow you to uncover your leverage, and manage your resources in the best way possible.
Finances
Mortgage lenders want to ensure that a property can carry itself. The most common reason for buying a second home is the concept of renting the house out in order to make money quickly. Unfortunately, the rent collected from tenants is not only used for mortgage. It’s also used for: vacancy, maintenance, bad debt, taxes, and expenses, which can halt the “get rich quick” idea of renting out a home. Remember that making money quickly is not necessarily the reality of renting out Chatham, Ontario real estate.
Be Warned: The Non-Owner Occupied Home
Legal fees and appraisal fees can be costly. This is only raised when buying a second home that is not meant to be occupied by the owner. This is again increased when the home involves more than one unit to be rented out. This is because the home is viewed as a higher risk with unknown tenants. Banks often increase interest rates for the units.
Expenses do not stop after the house is yours. When renting a property out, it is your job to maintain the property. You also need to be able to pay the mortgage in the case of a unit vacancy. It is also important to find tenants you can trust with the property, and to pay their rent. If your tenants destroy your property, your investment becomes a liability as it will be up to you to make the repairs. For more information on Chatham, Ontario real estate, it is advised you contact a Chatham realtor.
In the case of trustworthy tenants, family members often make the best tenants. Sometimes parents will buy the home for their children when their child goes to university or college. This is often a smart investment as they can be sure the home will remain in tact.
Chatham realtors are great resources to help you plan your second home. If you are planning to purchase a second home, or if you have any further inquiries or concerns, please contact me or check out one of my many Chatham-Kent Real Estate Resource. We have information on which plan is best for you, and whether a second home will be an investment, or a liability.