Just because you want to move house, that doesn’t mean you need to sell your current property as well. You can simply rent your current home and buy another one.
Although getting the capital to pay for your second home isn’t always easy, it’s possible with know-how.
You need to discover what to do to avoid getting yourself in financial difficulty. Are you ready to find out more?
Check out the below guide on how to buy a second home and rent the first.
- Organize Your Finances
Before you buy your second home, there are some things to consider. First of all, make sure your finances are in order.
If your income isn’t changing, you need to determine whether you can really afford to pay the extra costs.
Even if you’re taking out a loan, then you need to be able to pay the interest on your loans.
Since this isn’t your first property purchase, increased down payments could also be a factor you need to consider in your budget.
Just don’t go ahead with anything by yourself. Speak with a financial advisor to analyze your circumstances before you go forward.
- Take Out a Loan
Unless you have bags of cash everywhere, you’ll probably need to take out a loan to afford your second home.
There are many types of loans that can help. You could take out a Home equity loan. This uses your current property as equity to borrow against.
You could also take out a personal loan or take out a standard mortgage.
- Get Your Down Payment
Make sure you have enough for the down payment as well. This is usually between 10% and 20% of the property price.
Remember, the higher the down payment, the lower the interest rate. Therefore, it’s always better to try to put together enough for a decent down payment.
- Find Tenants for Your Property
Now you have your finances prepared for your second home, you need to get tenants to pay the rent of your property.
If you have an annoying tenant, this could cost you money. You need to make sure you get reliable and trustworthy people to rent your property.
You can determine whether someone would make a good tenant or not in a number of different ways. This includes asking for credit checks and requesting references from former landlords.
- Hire a Property Manager
Many landlords decide that renting out a property is more trouble than it’s worth. It can involve numerous sleepless nights dealing with the concerns of your tenants.
However, you can pass on the responsibility for the day-to-day operations of your property to a manager.
They will demand a percentage of the rental payment. However, this could be worthwhile since it allows you to concentrate on other things.
How to Buy a Second Home and Rent the First?
Are you thinking about investing in property? You don’t have to break the bank to put your money in the property market.
If you want to know how to buy a second home and rent the first, then you can discover more business and real estate tips on our website.