7 Steps to Buying a New Home

If you've been thinking about buying that second home, now is the time to do it because despite recent growth in the real estate market, it's still a buyer's market. Whether you're looking to buy a vacation home, a home for your retirement, or an investment property, you have plenty of options open to you, including having a home custom-built specifically to your wants and needs.

But, like every major endeavor in life, planning is key when buying a new home. Here, Trusst Builder Group's Wilmington NC builders share seven important steps to buying a new home.

Step 1: Can You Really Afford a Second Home?

Buying a second home is a significant investment and for many home buyers, the expenses are often more than they imagined. After all, this home will require upkeep and maintenance just like your current home. It will also require utilities, taxes, and insurance.

In order to make sure you can truly afford a second property, you need to take into account any expected costs the property will require. Unless you're planning on renting the property, you will also need to factor in the cost of a property management company since you won't be there on day-to-day basis. And, if you are planning on renting the home out, then you will want to ensure the rent you charge is at least enough to cover the cost of your expenses.

Step 2: What Type of Home Do You Want?

The type of home you choose to buy will affect your overall expenses. For instance, a condo, townhouse, or co-op will generally have lower maintenance costs than a single family home because these properties offer fewer homeowner responsibilities. That said, if you prefer being able to do what you want with your home, then you'll want to avoid these properties as most are governed by homeowner's associations that deeply restrict the abilities of their unit owners.

Step 3: Where Do You Want the Home to Be Located?

This is an important consideration because if you buy a home in a bad location, then you'll have a hard time renting it out or reselling it. Do your research and look into an area's economic strength, the regional housing market, local amenities, property tax rates, access to medical care, the quality of its school system, and other factors that can help you determine whether or not it's a good place to buy a home.

Step 4: Tax Implications of Owning a Second Home

When you buy a second home, you will have to deal with a variety of new tax implications. For instance, you'll be responsible for the property taxes on another address. Or, if you're planning on renting the home out, then you're going to be responsible for claiming the rent as income on your income taxes. Before you buy that second home, be sure you understand how the purchase will affect your taxes and what you can do to help offset them.

Step 5: Financing Options

Most second home purchases require down payments of at least 20 percent of the purchase price. But, the way you choose to finance the remainder offers more varied options. You can opt for the standard mortgage loan or you can go with an alternative method like borrowing the necessary funds from family members or close friends. The latter choice will save you thousands of dollars in interest. Or, if you're interested in buying a vacation rental, then partnering with another buyer will cut your costs right in half.

Step 6: Being a Good Landlord

Buying a second home for income purposes can be a great way to make extra money, but you should be aware that it often takes a few years before rental properties start turning profits. Your first step to being a good landlord, however, is deciding whether you want to rent the home out long-term or periodically. In either case, it is crucial to do your due diligence when considering tenants. You want only good tenants and trustworthy renters. You should also learn about leases and short-term rental agreements as well as the legal issues involved with being a landlord. Taking the time to learn what it takes to be a good landlord will make it easier to manage your property and your tenants.

Step 7: Protecting Your Second Home

The process of protecting your new home actually begins before you even own it. You start protecting your home by having it inspected prior to purchasing it. This will let you know what major repairs are needed and which minor repairs will need to be addressed in the near future.

You will also want to purchase title insurance to help protect against problems like previous ownership debt claims on the property, and of course, hazard and liability insurance to protect the home from theft, fire, and other potential damages and personal injury claims for injuries that might occur on your property.

Trusst's Wilmington NC Builders Can Help You Get the Second Home of Your Dreams

If you are interested in buying a second home to meet your future living needs or investment dreams, then Trusst Builder Group can help. We have been one of the Wilmington area's leading custom home builders since 1992 and we specialize in building high quality homes and forging long-lasting relationships with our customers.

We build in some of Wilmington's most prestigious communities. Or, if you prefer a custom-designed vacation home on the coast, then we can do that too. Call Trusst Builder Group today at 910-371-0304 to schedule a consultation with one of our Wilmington NC builders. We'll help you get the home you want.