Buying a Second Home in Colorado
It’s easy to imagine yourself living in a fantastic ski condo or outdoor resort in Colorado. And the hot tubs that come with them usually? To die for!
If you feel like you’re spending a lot of time looking at a second home here in Colorado and your finances are in order, it might be time to take action and get that lovely second home. Here are a couple tips to help you know if you’re truly ready:
1. Long Term Appreciation. It can be a huge motivation for buying property in the first place. Keep in mind the supply and demand of homes in the area and where you can maximize your return on investment.
2. Rental income. If you’re looking for some passive income, you can rent out your second home when you aren’t using it during peak rental times. If you’re absolutely in love with your second home, then you can rent out your first home to help cover your new expenses. Either way, it’s something to consider if you plan on keeping both homes!
3. Tax advantages. Depending on the scenario and how often you use this second home, you might qualify for certain tax advantages. If you’re renting out this second home, you may qualify for even more tax breaks. Talk to your local tax professional to gain guidance on this.
4. Retirement. If you are absolutely in love with this second home’s community and you could see yourself retiring there, then that is a HUGE win!
5. Easy vacations. If you’re the type of person that enjoys ski vacations or simply need a place to escape once in a while, a second home is a great, cheap way to enjoy yourself. Plus – you can pass it off to your future generations!
A couple cons though…
1. Financing can be more strict. Sometimes lenders will require up to 25% down! That’s a little steep. Something to consider before making an offer.
2. HOA fees. If you are looking at a home in a ski town or outdoorsy neighborhood, HOA fees can accompany your purchase. Those aren’t too fun, but there can be some serious benefits to them as well!
3. Of course you’ll have utilities to pay for. If you’re in an area where it gets REALLY cold in Colorado then that heating bill is going to go through the roof.
4. Accommodation unit license and tax. A lot of resort towns are requiring Air BNB properties to purchase this license and pay a fee. You’ll usually get a letter in the mail shortly after purchasing the property.
5. Real estate transfer taxes may apply. These can usually don’t go above 2% of the purchase price.
6. Fees while you’re away from the home. You might not be in the home all of the time, but it still requires some love and care once in a while!
I hope these couple of tips will help you decide if you’re ready for a second home and what to expect after your decision. If you need any assistance with this, I would be more than happy to help!