Difference Between Investment Property and Second Home
Often times people refer to their property that isn’t their primary residence as either an investment property, or second home. While broadly this may work, there are actually distinct differences between these two types of property.
So what is an investment property?
These properties usually have these two characteristics:
- is not your primary residence
- is purchased or used with the intent to generate income, profit from price appreciation, or seek tax benefits
Essentially, if you buy real estate that is meant to make you a profit, as opposed to using it as a residence, then it’s an investment property.
Now, the faces of an investment property are many. It could be a residential rental property, or a commercial property, or even property meant to be used in a “flip” (buying with the intent to resell for a gain)
It’s important to note that if you are seeking a loan for an investment property, then you should expect to have higher interest rates that typically require a larger down payment. If you are looking for IP help then you should do research on agents or companies that know your local area.
As you can probably guess, a second home is basically a vacation home. It’s a residence that is used as a primary residence for just a part of the year. There are special second-home loans available, but the property needs to be located in a resort or vacation area.