Is a Second Home a Good Investment? Yes, If you buy in Seattle!

Posted by sonnykwan

July 29, 2008

Did you know?

Almost 40% of those buying a second home don’t plan to use it for vacation purposes, but rather as an investment property. In most areas throughout the Seattle region, home values have appreciated at an exponential rate. Partner that with continued low interest rates and many homeowners find they are in a good position to invest in additional real estate. While many second homeowners are seeking mountain seclusion or a beachfront getaway, the number of those investing in a second home to pad their portfolios is growing consistently. Is a second home a wise investment for you? There are several factors to consider:

Can You Afford It?

There are many costs associated with owning a second home besides the additional mortgage. Some things to keep in mind are maintenance, repairs, property taxes, security, and insurance.

Location, Location, Location

Where you choose to look for a second home can determine how smart an investment might be. For instance, a waterfront home on the shores of lake washington in Seattle sounds lovely and should be easy to rent when you’re not using it, but will it be in danger come flood season? Also, if your investment property is located in another city or state other than Seattle, consider the travel expenses, not to mention time, involved with every visit or check-up. Another issue can be the market in which the property lies. Houses might have appreciated steadily over the past two years, but what will happen to home prices as we enter a less frenzied, more balanced market?

Taxes

How will owning a second home affect your taxes? Each case is different. I recommend talking to your lawyer or financial advisor to fully understand the benefits and potential pitfalls.

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