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What you need to consider when Purchasing a Second Home

by Wayne Wargo (PenWay.org)

Most of us have either dreamed or thought of owning a second home to retreat to whenever possible. It doesn't matter if it's a vacation home or a hideaway! Is this the time to buy?

For many of us, this is just a dream. But, it may one day become a reality. When you were younger you bought a nice home in a new or established neighborhood, maybe married and had a family. In the back of your mind there may still be the desire and hope that buying a second home is possible.

Vacations are part of that dream, the chance to visit new locations and the local sites. And then maybe you see it! The local newspaper at your vacation destination has a real estate section right there. Dare you even look? Can you even afford to look? Two homes? Is dual home ownership for you?

A second home can work for you, but you have to go into the process knowing what to expect. According to recent data, the price of real estate in areas that are deemed "Vacation Markets" has risen twice as fast as real estate in other areas. So, not only is a second home in your destination of choice going to cost you a pretty penny, it's no longer a well-kept secret anymore and the chances of you flipping it to make a quick buck are slim.

The best piece of advice a possible vacation homebuyer can heed right now is to buy for love and not for money. Recent sharp downturns in vacation markets have shown that trying to turn a profit in a vacation market is close to impossible. But there is a bright side to all of this. With the housing market in decline all across the country, those that are looking to sell will be doing so at lower prices. Now could be a great time to buy a place that you're planning on keeping for a long while.

But how do you really know how you feel about the whole thing? Well, take some time and evaluate the overall process of buying another home. Once you've decided on an area you really think you will enjoy, spend some time there to make sure you like it. If it's going to be a vacation home, you'll want the scenery to be relaxing (if that's what you're looking for) or exciting (if that's what you go on vacation to experience). The bottom line of all of your analysis and planning is the overall cost. If the price of the two houses makes up more than one third of your total income, you will probably will spend too much.

Take your valuable time to properly evaluate the pros and cons before you decide to own that second home or you could find yourself on a permanent vacation, or even worse. Even rich people have to consider whether it's worth buying a second home.

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