We’re sure you must have heard about the “not-so-great news” about housing affordability and have also been impacted by this crisis. Because of this, many homebuyers in Canada have been compelled to buy their second home first.
But what are these second homes and how are these MLS listings in Ajax different from a first home? Also, what are the benefits and considerations of buying a second home first in Ajax? Let’s explore below!
What Exactly Is a Second Home, and How Does It Differ from Your First Home?
Buying one’s first property is a big dream for many people and we are sure it must be yours too. But what if your preferred property type in your favourite neighbourhood is too expensive for your wallet right now? This can be quite frustrating and make you feel like you’ll never become a homeowner.
But, aspiring homeowners, cheer up – there is a smart strategy that can help you achieve your dream: you can buy your second home in Ajax first. This means buying an affordable MLS listing in Ajax that doesn’t tick every box in your list. You can use this second home as an investment until you can afford the home you truly want.
Usually, a second home is a property you buy in addition to your primary residence (first home). These second homes are often used by buyers for vacations, weekend getaways, or investment property. So, the second home is not your main place of living but rather an extra property you own.
Benefits of Starting Your Homeownership Journey with Your Second Home in Ajax
Here are some compelling reasons why buying a second home first could be a smart move for aspiring homeowners –
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Pathway to Your Forever Home Through Built Equity
Owning a second home in Ajax allows you to start building equity sooner rather than later in the housing market. Over time, as the value of MLS listings in Ajax appreciates, your return on investment (ROI) from the second home will grow. You can eventually use this equity as a stepping stone towards buying your dream home in your preferred location in Ajax.
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Make Your Second Home Work for You: Earn Rental Income
You can rent out your second home in Ajax to earn rental income. This extra income can help cover mortgage payments, property taxes, and maintenance costs of the property, making your homeownership journey more affordable overall. You can also allocate a portion of your rental income towards the down payment savings pool for your dream home.
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Maximize Your Tax Benefits
You may also get tax benefits from your second home in Ajax. For instance – if you rent out the MLS listing Ajax, you can deduct certain expenses related to the renal income. This could be property taxes, maintenance costs, mortgage interest, or others. Also, if you plan to move into the second home and make it your primary residence in the future, you may be able to take advantage of Principal Residence Exemption (PRE).
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Your Second Home Can Fund Your Golden Years
Your second home in Ajax can serve as a future retirement asset. You might choose to retire there or sell it later to fund your retirement plans.
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Level Up Your Homeownership Skills
Managing a second property teaches you valuable skills in property management. From dealing with tenants to handling property maintenance issues, you can gain practical experience that braces you up for homeownership and future real estate investments.
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Your Home Away From Home: Relax, Reconnect, & Recharge
Not just as a retirement home, you can use the MLS listing in Ajax as a vacation home or a get-together place for family and friends.
Key Aspects to Think About When Buying Your Second Home in Ajax First
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Assess Your Financial Situation
A second home will come with additional expenses on top of your current living expenses. You’ll be responsible for paying for property taxes, homeowner’s insurance, maintenance and upkeep of the new home.
This is why make sure your current income can comfortably cover your existing living expenses and leave enough wiggle room to handle the new property’s costs. You cannot solely depend on the rental income of the second home to cover all expenses.
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Define Why You’re Buying a Second Home First
Figure out if you’re buying the Ajax MLS listing for rental income, vacation purposes, future retirement, or as an investment property. Once you know your purpose, you can make informed decisions about location, property type, and financial planning.
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Gain a Clear Understanding of the Legal and Tax Implications
Consult with a tax advisor or real estate attorney to understand the legal and tax implications of owning a property that won’t be your primary place of residence.
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Consider How You Will Manage the Second Home
You must figure out how you will manage the second home, especially if it’s far away from your current rental property. Decide if you’ll manage it yourself or hire a property manager and factor in the costs in your budget. You must regularly and properly maintain the property to preserve its value and ensure tenant satisfaction if renting out.
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Evaluate the Risks Involved
When buying a second home, you must figure out the risk management of the MLS listing in Ajax in advance. Assess the potential risks in buying a second home such as fluctuations in property values, economic downturns affecting rental demand or unexpected expenses. Once you acknowledge the risks, create a plan to mitigate them so you can hold onto your second home successfully.
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Plan an Exit Strategy
You must have a plan to sell your second home 5, 10, or even 20 years down the line to buy your dream home. For that, you must plan an exit strategy in advance for when and how will you sell your second home. This will help you to choose an MLS listing in Ajax and a financing option that aligns with your goals.
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Weigh the Impact on Your Personal Life
Lastly, consider how owning a second home in Ajax will influence your lifestyle and personal priorities. The second home can provide you with enjoyment and flexibility but it will also require time and effort to manage effectively.
So, Is Buying a Second Home in Ajax First a Smart Move?
Buying a second home (investment property, vacation home, or retirement home) before your first home (primary residence) can be a strategic move. The rental income or value appreciation from the second home can help you buy your dream later on. Also with renovations and upgrades, the second home could become your dream home someday.
But remember this home-buying strategy can also backfire on you. This is because you’ll be financially responsible for two properties which may sound easy but is actually not.
You’ll have to shoulder the mortgage payments, taxes, insurance, maintenance, and also your current rent payments together. Additionally, by buying the second home or investment property first, you might miss out on government programs and incentives that first-time homebuyers get.
To make an informed decision while buying an MLS listing in Ajax, evaluate your financial situation and consider your personal circumstances. This will help you figure out if buying a second home in Ajax first is the right move for you.
