Understanding Investment versus Second Properties
Grade for the kids in the pic: F-
It is that time of year again: school has begun and winter vacation is already in our hearts and minds. But buying a log cabin in Aspen and buying and renting out a condo near University of Wherever do NOT require the same loan process!
An investment property is a home that is not your primary residence but is purchased with the intent of generating income, reaping tax benefits, or profiting from appreciation. Investment properties can be residential or commercial.
A second home is a home you buy that you will visit and/or occupy on a regular basis. Second homes are usually utilized as vacation homes, but some might choose to split their time between the second home and the primary residence. In order to obtain a second home loan, the home must be located a certain distance from the buyer’s primary home or must be located in a vacation area.
So what’s the biggest difference?
Investment properties have larger down payment requirements and higher interest rates than second homes do. A second home can’t be rented out for any reason, but an investment home is encouraged and is expected to be rented out on a regular basis.
Learn more, including how to finance each: