The market for South Beach real estate is hot, especially among people who are looking for vacation homes and investment properties. Perhaps you’re thinking about shopping for South Beach Miami luxury homes and you’re hoping to find some tips and tricks that will simplify the process or help you get started. Here are six things you need to know about buying a second home in South Beach.
Make a budget
There are a number of expenses that come with owning a second home. Just like with any home, you’ll need to set aside some cash to cover your down payment and make sure you’re prepared to handle the buyer’s share of the closing costs. You should also think about the ongoing expenses that you’ll have to provide to cover utilities, HOA fees, and maintenance. If you’re going to rent your home out on a short-term or long-term basis, you may spend money on listing fees depending on what platform you use to rent your home. If you want to hire a property manager, that will be an extra cost as well.
Rather than keeping all these things in your head, it’s a good idea to get your thoughts down on paper by writing out a budget. This will help you keep track of what all of your obligations are and how much you need to set aside for each expense. It may also be a good idea to talk with someone else who owns multiple homes to get a better feel for how they approach the process of budgeting and how they juggle all of the financial responsibilities.
Determine how you’ll get funding
Some people will use traditional funding to purchase a second home. They will connect with a lender who can provide them with a pre-approval letter just like when they purchased their first home. Others will use different funding sources, such as tapping into their current home equity with a HELOC (Home Equity Line of Credit). You may qualify for a HELOC if you have a credit score of at least 620 and 15% equity in your current home. HELOCs are essentially a second mortgage, and you’ll make an additional payment for your HELOC each month along with your traditional mortgage. You could also use a cash-out refinance that allows you to borrow more than what you currently owe on your home. This gives you extra cash that you can put towards the purchase of your second home. You will only have to make one mortgage payment each month, but this could change the interest rate and the term of your current loan.
Look for ways to boost your ROI
Some people will want to rent out their second home during the times when they are staying elsewhere. Others will simply want to look for improvements that they can make to raise the value of their property. Whatever side you fall on, this is a good thing to think about as you consider purchasing your second home. If you want to generate passive income in your home, you can look into listing your home on a short-term rental platform. This will allow you to rent the home out to short-term guests when you are staying elsewhere. If you would rather reserve your home for personal use, you could think about which home improvement projects tend to offer the greatest ROI.
Consider the tax implications
Regardless of whether or not you rent out your home, you’ll want to study how owning multiple homes will impact your tax obligations each year. If you want the most precise information, it’s a good idea to consult with your CPA or your real estate agent.
You only have to report rental income if you rent your home out for more than fourteen nights during a calendar year. If you don’t reach this number, you won’t have to report the income, but you also cannot claim any deductions besides the two expenses mentioned above. Once you rent your home out for fifteen nights (or more), you’ll have to report the income on your taxes. Again, this is just a brief overview, and reaching out to an experienced agent can help clarify the details.
Hire a property manager
Hiring a property manager will help you keep up with maintenance and repairs on your homes. This is especially helpful if your primary residence is elsewhere or if you plan to have tenants staying in your home. Having a property manager on call will give them someone to reach out to if they have urgent maintenance requests. The property manager can also communicate with contractors such as a lawn care provider, and they will visit the home throughout the year to prepare it for changing seasons and potential natural disasters as needed.
Work with an agent who knows the area
If you’re thinking about buying a second home in South Beach, one of the best tips is to work with an agent who has a thorough knowledge of the local housing market as well as the area’s best neighborhoods. The Carmenate / Duchon team
combines unparalleled local knowledge with exceptional marketing skills to stand out from the crowd. They have spent 30 years buying and selling South Beach luxury homes, and they have built a tremendous reputation for success during that time. They work tirelessly to serve each client to the best of their abilities. Reach out to their office if you have more questions about purchasing a second home or if you’re ready to start looking at properties for sale in South Beach
. They would love to partner with you.