Are you on the hunt for a second property?

Whether you're looking to expand your real estate portfolio, upgrade your living situation, or invest in a vacation home, you're not alone in this exciting journey. However, as you probably already know, the path to buying a second property can differ significantly from purchasing your first. 

Unlike your first property, where your main focus was probably creating a comfy nest to call home, this second property venture could have a different twist. It might be all about generating rental income, expanding your investment horizons, or simply embracing a change of scenery.

With this in mind, these are the seven top tips to help you navigate the unique journey of securing your second property. 

Determine How Much You Can Borrow

First things first — before you start your search for a second property, it’s crucial that you determine how much you can borrow. Unless you’ve won the lottery, chances are you'll need some financial assistance to make your real estate dreams come true. And in most instances, this will be a bank loan. 

However, don't let the prospect of borrowing deter you — figuring out your borrowing capacity is really not as scary as it sounds. Generally, the amount you can borrow is influenced by a number of different factors, including your income, credit score, existing debts, and current lending environment. If this all sounds a little too complicated, the good news is that there are dozens of online tools like a borrowing power calculator that can help demystify the process. These tools allow you to input your financial details and receive a rough estimate of your borrowing capacity within minutes.

Once you have a preliminary figure that you’ve attained independently, we also recommend enlisting the services of a dedicated financial advisor before you head to a mortgage broker or to your bank. That way, you can also ensure you walk into this process with third-party insights. Thankfully, there are plenty of financial planners in Melbourne and wider Victoria who can provide you with expert tips and insights into Melbourne’s unique property market and how best to position yourself as a second-time buyer.

Remember — determining how much you can borrow is the first and most important step to take when considering a second property. The last thing you want is to dive into the real estate waters without a good sense of your financial swim trunks. So, before you make any moves, get that borrowing power scoop.

House or Apartment? 

Another vital thing to think about when considering your second property is whether you’ll be purchasing a house or apartment/townhouse. This choice carries various implications, and it's crucial to align it with your lifestyle and financial circumstances: 

House

Houses also typically offer larger square footage, which can be perfect for those planning to expand their families or who enjoy outdoor activities. The freedom to customise and renovate a house to your liking can also be a significant draw, allowing you to create a unique space that truly feels like home. Not to mention, you won’t have to fork out body corporate fees as you would with an apartment or townhouse. 

However, the downside is that houses often require a lot more maintenance, which can be a drainer if you’re someone who leads a busy lifestyle. Houses also tend to have a higher upfront purchase price, so be prepared to allocate more of your budget to the initial investment.

Apartment/Townhouse

Apartments and townhouses are a great option if you’re working with a smaller budget, or looking for a low-maintenance living option. Because of their smaller size, they often cost less than a house and require less maintenance and upkeep. Not to mention, maintenance of common property and amenities are handled by body corporate, making your life that bit easier.
However, this smaller square footage can be a downside if you’re planning to expand your family or prefer larger spaces for activities such as gardens, backyards etc. Additionally, customisation may be limited, and ongoing body corporate fees can contribute significantly to your monthly expenses. 

At the end of the day, your choice between a house and an apartment or townhouse should be a perfect match with your lifestyle, budget, and the rental potential of your chosen location.  As Baw Baw Shire is preparing for a large-scale housing development project, prospective second homebuyers may find just the property they’re looking for in this upcoming housing boom.

Remember That Location Matters

When it comes to buying your second property, say it with us: location is key. Regardless of whether you’re purchasing a gorgeous new home to live in or rent, location will play a key factor in determining not only your day-to-day convenience but also the long-term value and desirability of your investment.

Some of the main things to consider when choosing your ideal location include proximity to amenities such as public transport and schools, future development plans for the suburb/neighbourhood, and of course, your lifestyle. After all, there is simply no point in purchasing a beautiful property if it's in the wrong location for your needs and aspirations.

Again, these same factors will also play a huge role in determining how attractive your property is to renters, so making a well-informed decision is the key to generating steady rental income and securing the long-term value of your investment. 

Budget For All Costs

Since you already own one home, you’re probably well aware of all the hidden costs that come with purchasing a home. Indeed, purchasing a home is no easy feat, especially when you can’t simply send a text to your landlord about a leaky pipe or call maintenance for a quick fix. This is why you should always budget for all costs when considering a second property.

For starters, don’t just hone in on the purchase price. If you do, you may very well be met with additional costs that catch you by surprise down the line. Instead, do your due diligence and look into costs associated such as property tax, home insurance, body corporate, utilities, ongoing maintenance and vacancy rates during low periods. 

By planning for all these expenses from the start, you'll have a clear view of your financial commitments as a second property owner. This foresight empowers you to make savvy choices, sidestep financial headaches, and ensure your second property becomes a worthwhile part of your real estate portfolio or lifestyle. 

Consider The Rental Potential

While you may want to call it home today, it’s no secret that life is full of twists and turns. Job opportunities, changes in relationships, a growing family and personal circumstances can lead to unexpected changes. That's where the rental potential of your second property comes into play.

To ensure that your second property is ready to face what the future may (or may) not bring, it’s vital to choose a home that possesses qualities that appeal to potential renters. Think about it this way: if you were renting a home, what would you look for? Chances are you’d prioritise location, layout, proximity to amenities, and a well-maintained and attractive appearance. No one wants to live in a dump. 

Additionally, consider the flexibility of your property. Can it easily adapt to different lifestyles and family sizes? Does it offer features that are in demand in the rental market, such as energy-efficient appliances or gorgeous outdoor spaces? Remember that the competition out there is stiff, and by prioritising these factors when choosing your second property, you can boost its rental potential and keep it adaptable for the unexpected. 

Consult With A Real Estate Professional 

Life is hectic and there are a million things vying for your attention. That's why, sometimes it’s a great idea to consult with a real estate professional. Sure, you could go it alone, but remember that the real estate landscape can be (annoyingly) complex, and having an expert by your side can save you a ton of time, stress, and help you make the smartest choices.

A qualified real estate agent will have inside knowledge on the hottest properties, can help you decode all that complicated paperwork, and are pros at securing the best deals on your behalf.  Plus, they're like having a real-life RealEstate.com on speed dial, making your property search a total breeze.

When choosing the best real estate agent to work with, be sure to look for someone who not only understands your lifestyle and goals but also shares your enthusiasm for finding that perfect second home. Don’t forget to check online reviews, ask for recommendations from friends or family, and interview potential agents to ensure you find the perfect match for your real estate journey.

Be Patient and Don’t Rush It 

Finally, remember that patience always pays off, so don’t rush the process. Buying your second property is a major (and somewhat life changing) decision, so you’ll want to take the time to find the right property that aligns with your lifestyle and financial capabilities. Remember, you don't have to feel pressured into making a quick decision, no matter what anyone says. Instead, be patient and selective in your search to ensure that you make a sound investment. 

At the end of the day, it's not just about finding a house or apartment — it's about securing your future, and that's a process that's well worth the time and effort. The last thing you want is to make a bad investment that haunts your financial dreams when you could have waited a bit longer for the right one. So, take a chill pill, trust the process, and when the stars align with the perfect property, you'll know it was worth the wait.

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Yes, purchasing a second home is fairly different to buying your first one. But whether you’re purchasing a brand new home to live in, or an investment property to help secure your financial future, you will find that adding to your investment portfolio with a second property will accompany a wealth of learning opportunities. And with these seven top tips for buying your second property, you’ll have a solid roadmap to smart, savvy homeownership.