Hello World! Welcome Friends! There are several reasons why someone would want to get a second home, and if you can’t think of one but want to know some practical reasons why this guide is a great place to start.
Buying a Second Home in Canada – Is It Easy?
This depends on how much money you’ve got, what your credit history is (if you’re considering financing), and which area you’ve chosen to get a second home. Or maybe you’re not sure between townhouse vs. condo and need help? Maybe insurance costs concern you? Whatever the issue is, getting help from a professional realtor can solve more than half of your problems.
Just make sure to assess your goals first; why you’re getting a second home and what size you’ll need. Once that’s clear, it’ll be easy to come up with a plan of action and with the help of a mortgage calculator, you can see if your goal is truly possible.
Top 7 Reasons Why You Should Invest in a Second Home
Although there are many benefits of owning a second home, like a place of retreat or holding large family gatherings, this article will discuss the financial side of things. So if you’re ready, let’s start:
It Pays Well in the Long Run:
Your first home is also an asset, but its financial worth is secondary to you – it’s more like your heaven on earth where you relish life to the fullest with your loved ones. For real financial value, the one where you can liquidate the asset quickly and bank on an arising opportunity, a second home is needed. We all know real estate value almost always increases with time, especially in flourishing economies like Canada. If you’re planning to move in BC, you can check Langley homes for sale and choose which home best fits your family.
In Canada alone, the average price of a house increased from $488,000 in 2018 to $520,000+ in 2020. A significant increase in value in just a period of three years. This clearly tells you why having a second home solely for financial purposes pays off.
Tax Benefits:
The reason many people invest in a second home in Canada is the tax benefits offered by the government. Here are a few tax advantages:
- Yearly amortization rate of 4% of the purchase price
- Very lucrative tax credit system
- Income from a property has very light taxes
- Great financing opportunities with minimal taxes, best if you’re a foreigner
- Social security contribution exemptions
- You don’t pay tax if your home is rented for less than 15 days a year
Earn Rental Income:
Robert Kiyosaki, an American investment expert, always says your home is a great asset if you are earning from it. Besides waiting for it to grow in value and then getting that money, you can rent it out till then. You’ve got stats for the growth of the real estate market above. Go through them and plan how long you want to hold the house; it will not be less than 3-5 years at least. So why keep the home empty till then? Fill it up with some tenants.
Yes, you’ll have to pay some taxes on the rental income, but it won’t impact the money you make by much. Instead of keeping your house sitting empty for years, you can get tenants and rake in some good money.
And, if you want to convert that monthly spare change into a solid income for when you retire, consider buying multiple houses. It’s a great source of passive income. Start with one home, save its rental income and add some from your pocket for the down payment of the second one and that’s how you can keep buying more and more.
You Can Make a Switch:
Let’s say you buy a property, and after a few years, your first home sees a greater increase in financial value than the second one; you can switch properties. If the second home is also in good condition and as per your standards, you can shift there and sell your first one.
Get money from that house, and buy a bigger house in the neighborhood of a second home or wherever you want. It’s not for everyone, as many have an emotional attachment to their first homes because it might be in the family for generations. But if yours is not handed down by your forefathers, selling it instead of the second home might get you some serious cash.
Flip Houses:
Want in on a secret? The secret that has created many wealthy real estate investors? Okay, here it goes—flip houses! What this means is you buy a house that can use some repairs and remodeling to get in good shape.
Once that’s done, sell it for a higher price immediately. Yes, remodeling would require some initial investment, but it will pay off. You can make a great profit doing this; many people even do this full time.
Vacation Rental:
If you are plan on staying in your second home a few times a year, then long-term renting is not possible. However, you can still make a good chunk of money (even more than rental income, depending on the location). You can put your house on the vacation rental market.
There are many startups like Airbnb where you can list your property, list the price depending on what’s common in that area, and start getting extra income. Whenever you want to visit the house and spend some time, take it off the rental platform and enjoy your stay.
Place of Retreat After Retirement:
Winters in Canada can be rough. Elderly people cannot bear it, so they fly away to warmer regions to spend 3-4 months of winter in peace, and that’s why the term “snowbirds” was coined.
So if you’re someone who plans for the long term, you can buy a second house now on easy long-term financing, and by the time you retire, you’ll have a home paid in full.
Depending on where you like, you can get a property in warmer regions like British Columbia or Ontario and fly there when winter gets unbearable.
Click the links below for any posts you have missed:
Novelty Gifts that Never Go Out of Style
5 Types of T-Shirts You Can Customize
5 Factors to Consider When Buying Furniture
Easy Ways to Boost Your Homes Curb Appeal
I’d love for you to join my email list! You’ll receive a notification straight to your inbox which will include links to my latest home project posts! Simply enter your address below.
Thanks for stopping by! Have a wonderful day/night depending on where you are in the world! Go with God and remember to be kind to one another!
Toodles,
[…] Invest in a Second Home […]