THE SECOND HOME INVESTMENT STRATEGY
Purchasing a second home as an investment property can be an incredible opportunity for financial growth. Whether it’s your first house or you already have 10, the possibilities to make a considerable return are infinite. But it’s not just about money, and I’m not just finding you a house. When you combine investing with lifestyle purchases, it’s about living and enjoying life too.
HOW TO PUT YOUR VACATION HOME TO WORK
This is about a lifestyle change. Whether you’re retiring and are looking to make money from alternate means, or you want to supplement your existing income, there is nothing better than real estate. Everybody is looking for a property in a great location that provides a great return. If you do your homework in advance, like investigating the location and value, your investment can provide dividends over the life of your ownership of the property. So ask yourself, “What does this second home mean to me?” “What do I need it to do for me?”
With more than 20 years in real estate and 17 years in banking, I guide clients to make these lifestyle changes at any time of their lives. I bought my first property when I was 15, and ever since, I have loved helping people find their own little piece of heaven. Rhode Island is my home, and I know how clients want to be able to enjoy, as well as afford to live, on Aquidneck Island. I have never had a client who didn’t make a return on their real estate investment. My last three clients have taken a different approach in retirement thanks to their investment properties. They left their corporate jobs and decided to enjoy life while vacationing and managing their investments on Aquidneck Island.
So what’s stopping you?
HAVE A VISION OF WHAT YOU WANT
Most of my clients are investors. Some flip homes, while the majority are seasonal landlords, specifically because Newport is a prime vacation destination. Sailing, mansions and vineyards here provide a smorgasbord of appeal to seasonal renters. Because of that, you should consider location to guide your purchase to ensure it’s in a place others will want to rent. I sell a lot of seasonal rental properties in the Easton’s Point area of Middletown for that reason. So define your needs, and it will help us determine the focus of our real estate search.
Be patient for the good deal that you’re looking for, especially if that property is worthwhile. And look at your end result. As long as the property is in a good location and is in good shape, it is going to bring a return on your investment. This is especially true for short sales or foreclosures. I had a short sale listed for a steal, and many other clients were interested but weren’t willing to wait the six months to a year for the approval process. Another client of mine exhibited patience, got the property, and sold it for $150,000 profit after expenses. You will get your return if you can wait for the right time to pounce.
When you do see the good deal, don’t be afraid to fight for it. Especially with short sales or foreclosures, which provide the best opportunity for maximum return, you have to be ambitious if you want a particular property. You also have to know when NOT to be ambitious, like with conditions on the offer. Trust yourself, and your realtor, to know when to waive certain conditions. The easier it is for you to limit your conditions it will be easier for the seller to accept your offer. Is a condition, like rubbish removal and a broken window, worth losing the house? Probably not. So be wise with your expectations and be assertive when appropriate.
Be flexible and live simply. If you want to be able to maximize a great real estate deal, be willing to relocate between your properties. Clients of mine had a primary residence as well as a couple of investment properties they rented seasonally. They would fix up a property, and then rent it when it was ready. They were retired, and their children were grown, so when they were approached to rent their primary residence at a great rate, they decided to float between their properties as they became available.
Have your finances in order. You can’t be flexible and jump on a good deal if you don’t have financing. If this is your first investment property, meet with a financial advisor or accountant to determine your tax status and budget. I will provide real estate facts, like the property’s potential within the market, comparable sales in the neighborhood, its potential resale value as well as rental rate. I will also provide a contractor, if needed, to evaluate the condition and provide a cost quote for repairs. So you and your financial advisor can calculate based on your borrowed funds, the money required to fix the property and how much you need it to return. Don’t forget to check with your city or town’s regulations with seasonal rental properties and third party sites, like Airbnb, as each one is different.
Working in real estate, living your best life in real estate and making money in real estate is within arm’s reach. For more details, as well as potential investment opportunities, contact Realtor Janie Aracil.