As with any investment, there are always pros and cons. That is also very true when it applies to real estate. Here are a few things to consider:
- It is a good first step in building your investment portfolio.
- Your second home may be in your favorite vacation spot and could produce income when you are not enjoying it.
- You have a second home that is used by other family members, such as college-age students or aging parents.
- If you the second home is a rental property, someone else is paying down the loan while the home value can appreciate.
- You can take your time and move-in when you want, if you own another home.
- There are additional tax advantages to owning real estate that you do not live in. Talk to your CPA.
- You will have to qualify to hold two mortgages if you don’t pay cash.
- You will have more than one property to take care of for maintenance and up keep.
- Naturally, you will have higher insurance premiums.
- Your insurer may not cover a vacant home.
- Real-estate is not a liquid investment. If you need the equity to cover an expense, it could take some time to sell the home.
- You may have to rent it out for a period of time and deal with tenants.