Aside from the purchase price, the bulk of planning for a second home revolves around the business of running a home. Monthly finances will need to be examined, not only to save towards and/or make monthly payments on the second home, but also for sustaining it once it is purchased.
In looking forward to owning your second home, certain factors can be beneficial to consider. Basically, the number one issue is that in certain instances, your monthly household expenses will obviously be likely to double, give or take some. Within this aspect are several more considerations that may be able to save a considerable amount of expense. Planning these things prior to purchasing will alleviate some stress and may make the dream become a reality much sooner.
The location of your second home will be as important as anything. You will need to decide which home is your primary location, and which is your secondary. Along with this comes the simple aspect of taxes, and which home will be homesteaded. Some areas may have a varied range of tax laws regarding the use of a second home, so this will make a difference.
Location will also affect insurance costs. If the second home is in another state, your current insurance agent may not be able to cover it, so you may need to carry 2 policies. If it is in the same state, however, you may qualify for some discounts with your current agent. Certain areas might need extra coverage such as flood or hurricane insurance, so this is something to be aware of, too.
Travel between the 2 households is another expense that may need to be considered in the budget, depending upon the distance between the 2 and how often the trip will be taken.
Upkeep of the second home is another aspect to keep in mind, which also ties in with the location aspect. If there is a lawn to mow, will you be able to take the time to trek between the 2 houses to mow, or will you have to hire it done at one or both of them? If a severe storm hits and a tree branch should fall on one house while you are at the other one, is it close enough for you to go check on, or do you need reliable resources to take care of any such happenings?
Aside from these things are the usual repairs. Replacement of appliances, or a furnace, or anything else that could potentially come up with owning a house could have to be allowed twice the budget.
How much time will you be able to spend in your second home, and when will it be? This question can help to decide between buying a small vacation home with minimal amenities, or an all-out second residence. A summer weekend home will likely need just a little extra time to be winterized each fall when it’s no longer being used for the year. A home that you will be spending extended periods of time in will have full-time issues to take into consideration.
In essence, to plan for a second home, imagine it as if its already yours. Think realistically about each of these aspects to come up with some realistic expectations for what expenses you will likely need to cover. Once the purchase price is covered, and your budget can support the expenses of a second home, all you will need is some time.