Are you considering buying a second home in Sonoma County? Purchasing a second property is an exciting step, whether you’re seeking a peaceful vacation retreat or looking to grow your real estate investment portfolio.
Before you dive in and start looking for your next dream home, there are several key factors to consider that could shape your decision and impact your financial strategy.
We sat down with local Sonoma County REALTOR® Lindsey Samuelsen, to walk you through what to keep in mind when buying a second property, whether you live in California or you’re shopping from out-of-state.
Lindsey provides actionable insights that can help you make the most of your next real estate move in Sonoma County.
Lindsey Samuelsen: Before starting your journey towards purchasing a second home, it’s important to think about your goals.
Are you looking for a vacation home, or are you looking to grow your investment portfolio?
If you’re looking to grow your investment portfolio, consider how you can get the most out of your down payment.
For example, a lot of people buy a property and live in it as their principal residence. Eventually, for whatever reason, they’ll end up wanting to upsize or downsize.
So, they’ll purchase a new home and rent out their old one.
This can work well with the bank because they consider the second property a new residence, not an investment.
Let’s say I’m living in house A, and I then buy house B to move into as my primary residence. I can buy the second property as my primary residence and take advantage of a lower down payment and interest rate.
However, if I’m currently living in and want to stay in House A but want to buy House B as an investment property, I’d need to have a bigger down payment. Plus, the interest rate will be higher because it’ll be purchased as an investment property.
If you want to grow your real estate portfolio with less money down, the first scenario is a great strategy to make that happen. Use the new home that you’re purchasing as your primary residence, and then turn your previous home into your investment property.
If you’re a California resident looking to purchase a second home, you’ll want to talk to your REALTOR® and your lender. And if you live out of state but want to purchase a home in California, I’d also advise that you talk to an accountant.
Talk with a REALTOR® in the area where you’re looking to buy. Schedule some tours to get a feel of the different neighborhoods.
Consider what you’re looking for in your ideal community, like the atmosphere, access to local businesses, restaurants, schools, or whatever it may be.
Set up online property alerts so you can start to see what homes are coming up and what the price points are.
Talk with your lender. If you’re out of state, make sure it’s a lender who serves California since every state might be a little bit different. You’ll want to make sure your lender can get a loan approved here.
Consult with a CPA in California to clarify any potential tax implications Each state is a bit different, so you will want to make sure you’re equipped with all the facts.
What areas in Sonoma County look like good investment opportunities for those in search of a second property?
If you plan to continue living in your current home and rent out the second property right, make sure the local rental market is good. Also, ensure the neighborhood allows rentals, as not all do.
I’m a little biased, but I think Rohnert Park is a great place to invest. I don’t have a crystal ball, but taking into account all the development in the area, there’s a lot of upside potential. Its downtown is being built up, and they’re starting to get funding for it. Plus, there are communities like SOMO Village that are really starting to lay the foundation for an incredible community.
With all the new housing developments being built and the fact that Rohnert Park is a college town, you probably won’t have a short supply of renters. We also have a lot of families moving into the area because it is one of the most affordable cities in this part of Sonoma County.
When purchasing a rental or vacation property in California, consider if you want it to be your dedicated vacation home or a rental when you’re not there.
If you wanted to purchase a home that could also be a vacation rental to make some income when you’re not there, such as listing it on Airbnb, you’d want to check that you’re purchasing in an area that allows short-term rentals. Check whether the area has a minimum 30-day rental policy, a time-constrained rental policy, or allows rentals at all.
Choosing the right property manager is important if you’re just strictly looking to purchase an investment property in California and you’re not looking to move into it. Find someone who has a good team of local contractors who can tend to the property if you’re not going to be on-site.
I’m happy to help you on your journey of buying a second property. I’m currently a REALTOR® with Luxe Places International Realty. You can reach me by phone at (415) 971-7437 or by email.
If you’re interested in living in a sustainable community that fuses the best of city living with the country lifestyle and all the amazing things that Sonoma County has to offer, we invite you to visit SOMO Village. To learn more, download our residential project brief or get in touch with us today.