Basics of Property Management: Screening Potential Tenants
4 Reasons For Buying A Second Home
Jesse Obrien
Even if you already own a home, there are circumstances in which it may make sense to buy a second home. Here are four reasons you should consider buying a second home:
You Can Use It as an Investment Opportunity
Many people buy homes that they will never live in; they use their second homes as investment properties by renting them out. If this is your primary reason for buying a second property, then you have to treat it like any other investment property. This means calculating all the regular expenses (think property taxes, maintenance fee, and utility fees, among others) as well as all the streams of income to confirm that you will be able to make money from the investment. You also need to evaluate the economic outlook of the neighborhood; investing in a neighborhood that is on the decline isn't advisable.
You Can Make It Your Vacation Home
If you frequently go on vacation in the same state or area, then you may prefer to buy a vacation home there instead of staying in hotels all the time. Most of those who take this option have large families, take extended vacations, and love their privacy. It may make sense to buy a vacation home that you can rent out when you are not using it to make some extra money. Don't forget that a vacation home may require higher maintenance costs than the home you currently occupy.
You Can Prepare It for Your Retirement
If you are nearing your retirement home, then it may also make sense for you to buy a second home as your retirement home. This is particularly helpful if you want to customize your retirement home so that it is in your preferred perfect state by the time you retire. Maybe you want to improve the landscaping, customize the landscaping, and grow some trees so that they are mature by the term you retire.
You Can Use It When Living in Another State
Lastly, there are people who actually live in two states by spending one half of the year in one state and the other half of the year in another state. Maybe it is the nature of your job that is making you live like that or you just enjoy the lifestyle. Whatever your reason for living such a lifestyle, it may make sense for you to have two homes rather than having to rent one each time you move.
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For the last several years, I've used a property management firm to help with my rental properties. One of the tasks that they handle for me is screening applicants who would like to move into one of my vacant units. Their expertise has helped me lower my tenant turnover and find people who want to stay with me for years. Part of the process is a tenant screening credit check. Before any further contact takes place, my manager orders credit reports from at least two agencies. That is enough to tell us if an applicant is a good financial risk. Assuming the references work out, I meet the candidate and make the final decision. If you own rental properties, let me tell you more about the benefits of having a property manager. I'm betting you'll find this type of arrangement will work for you too.