Seven Tips for Buying a Second Home in Fort Lauderdale

GSM International Group November 23, 2022
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Fort Lauderdale is a popular vacation destination and prominent location for luxury property. It’s a cultural hub with plenty of opportunities for shopping, dining, entertainment, and nightlife. Many investors have the area circled as a potential option for their second home. If you’re thinking about searching for a Fort Lauderdale luxury home, the steps below will help you prepare for the process.

1. Start early

Buying a home is a process that doesn’t happen overnight. Give yourself plenty of time to tour homes, attend meetings, prepare offers, and sign paperwork. It’s wise to allot more time than you think you’ll need to complete the entire transaction. Be sure to see and consider multiple properties before determining which one is the best fit for you. Since the Fort Lauderdale real estate market is usually competitive, you may have to search for homes for an extended period of time to find your dream home.

2. Assess your finances

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Fort Lauderdale luxury homes can be quite expensive, and in some cases, you may need to secure a jumbo loan (unless you plan to pay with cash). Getting a jumbo loan often requires a more extensive credit check and a higher debt-to-income ratio. It’s never too early to contact a lender to discuss your options. Some lenders require larger down payments or assign higher interest rates to loans for a second home. At the same time, interest rates can differ among lenders, so speak to multiple providers and learn where you can get the best rate.

3. Learn about life in Fort Lauderdale

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Fort Lauderdale is known for its warm weather, beach proximity, and thriving nightlife scene. The Miami-Fort Lauderdale area is one of the ten largest metropolitan areas in the entire US, and there’s always something to do here. Tour the multiple eclectic neighborhoods, explore the restaurants, or find a fun shopping district to visit. The climate is pleasant throughout the year so you can enjoy warm days and average temperatures in the 70s and 80s.

4. Think about ROI

It’s safe to assume your property will grow in value over time because of the appeal of living in a Fort Lauderdale luxury home. To understand how much growth is possible, speak with your realtor about current market trends. They can give you a better idea of where the market is headed in the future and what kind of return you might expect if you choose to sell your home in the future.

Also consider what you’ll do with the property when you’re away. Many people choose to rent their homes while they’re gone. This can be a great way to recoup some of the money that you spent on the home, but there are some financial considerations that should be taken into account. For example, your lender may have different requirements for homes that are purchased as investment properties. There are also tax ramifications that can come into play.

5. Talk with your accountant

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If you rent your property for more than fourteen days during a given year, you’ll have to report that income. This allows you to claim other expenses, such as upgrades and utilities, on a prorated basis. In addition, if you choose to rent your home, you may also choose to hire a regular contractor or property manager to assist in upkeep and repairs. You can claim this as a business expense as well, and this will help keep the home in good shape.

If you plan to rent your property for less than fourteen days, you don’t have to report the income, but you can’t claim any deductions on the home besides property taxes and mortgage interest.

If you’re not planning to rent your home, these considerations won’t apply. However, you will be capped at $10,000 per return on any property taxes you list. As for mortgage interest, there is a $750,000 limit on debt between your first and second homes. This is assuming that both loans originated after December 16, 2017.

6. Decide what kind of property you want

Some Fort Lauderdale luxury homes will offer convenient access to your favorite beach or entertainment district. These homes usually come with a higher price tag, and in the case of a beach home, may require more extensive insurance coverage. Weigh out all of these factors ahead of time to determine whether or not this is the right investment for you.

7. Work with a realtor you can trust

Choosing an experienced and trusted realtor is the single best decision you can make when purchasing a second home in the Fort Lauderdale area. A realtor knows how to navigate the process from start to finish to ensure you find the right home at the right price.

Once you’re ready to start shopping for a luxury property, contact the GSM International Group. We have over 20 years of experience in the Miami-Fort Lauderdale areas and take pride in passionately representing every buyer and seller.

*Header photo courtesy of GSM International Group

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