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What to Know Before Buying a Second Home

Many people dream of a second home, especially one in gorgeous Hawaii, but most never see it come to fruition. Lahaina homes for sale are highly coveted, but any property on the islands — even Kihei condos for sale — could make the perfect second home for you, as long as you can plan out the purchase successfully.
Before you start flipping through listings and dreaming about the furniture and decor designs for your new bedroom, though, there are some things you should take into consideration. This is a big purchase, no matter where you are financially, and it’s a big time commitment, too. Make sure you’re ready before you take the plunge. Read on for a guide that will help you feel confident in the purchase of your second home.

A second home means double the financial burden

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You might be thinking that Kihei condos for sale are a better option because they are a more negligible upfront cost. While you wouldn’t be wrong, no matter what type of homes you are looking at, there will be a considerable financial cost. It’s essential to be realistic when considering your finances and looking at the big picture of what you can afford.
You shouldn’t only consider if you can afford the second mortgage. If you have gotten this far in your thought process, you have probably personally done the math to determine how much you can spend monthly on not just a mortgage, but utility bills, taxes, and homeowners insurance on your new home. If you haven’t, maybe now is the time to stop reading and contact your financial advisor.
There are a lot of other things that go into buying a home, too. As a current homeowner, you already know about roof repairs, leaky pipes, and more. American Family Insurance estimates that the average homeowner spends about $1 per square inch, per year, for annual home maintenance costs. This cost is going to transfer over to your second home as well. It’s not just the upfront bills, but it’s the financial creep and recurring expenses that may put you off. Kihei condos for sale are a little more appealing since much of the maintenance is covered, but it’s still going to cost money in HOA or condo fees.
This doesn’t begin to calculate the travel expenses. The travel costs might not be so bad if you already live on the island or a surrounding island. If you’re looking at Kihei condos for sale from the mainland or abroad, though, that’s a more significant financial commitment to travel. Can you comfortably afford a second mortgage, the maintenance costs, and the flights to enjoy your second property?

Can you only afford it because of rent?

Many people think it’s a fantastic idea to invest in Lahaina homes for sale, because not only are they incredible properties to visit, but owners can also rent them out. This extra income means the finances might work better for your second home.
Renting is a whole other process, though. If you’re unfamiliar with it, you’re essentially getting into two things all at once: owning a second home and being a short-term landlord.
Before you commit to a purchase or buy Kihei condos for sale, be sure you know the HOA or condo association rules inside and out. Many of them will prevent short-term rentals, like Airbnb or VRBO. Even if you are allowed to rent the property out, consider the maintenance and cleaning costs between stays. You will have to pay someone to manage the property while you are away. Are you willing to schedule your vacations far in advance to plan around rentals? What happens if tourism takes a dive or travel to the island is restricted? Will you no longer be comfortable affording the condo?
These are important things to consider. If you can only afford the home with supplemental rental income, it may not be the right time to buy.

Consider the tax hit

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Of course, you’re going to end up paying taxes on your new home. Before you shell out a down payment or start looking at Lahaina homes for sale, consider how purchasing your new second home will change your taxes. If you rent it out when you are not there, that income will be taxable. Of course, as the owner, you may be able to get tax breaks on the interest you’re paying for the mortgage and any repairs you have to make to the home.
Before you decide, talk to your accountant and figure out the real implications of the potential purchase. Taxes are complicated, and depending on where your current property is and where your primary residence is, you may end up paying a lot more than you anticipated.

Who will care for it?

Consider the logistics of who will take care of your second home while you are in your primary residence. It’s another one of those issues many buyers don’t consider until it's too late.
If you’re considering Lahaina homes for sale, who is going to maintain the landscaping while you are gone? What happens if there is a storm? Will someone be there to assess any damages that may have occurred to the property, or will you have to fly in yourself?
This is another expense that can add up, but it can also just be a hassle in general. There is a significant time commitment to owning a second property. Kihei condos for sale are a little bit lower in maintenance in general, but there is still some upkeep while you are away. It’s essential to have an idea of a plan before you get serious about your search.

Hire a local real estate agent

If you’re getting ready to make the commitment and you’re seriously considering buying a second home in Hawaii, reach out to the ‘Ohana Real Estate Team today for expert guidance. This group has extensive experience working with all things “Hawaii” and is ready to guide you each step of the way.

*Header photo courtesy of Unsplash

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